The interest rate in the federal funds market:
A. is determined by the imposition of price controls imposed by the Fed.
B. rises when the quantity of funds demanded by banks seeking additional reserves exceeds the quantity supplied by banks with excess reserves.
C. will fall if the Fed sells bonds and, thereby, reduces the reserves available to banks.
D. is an interest rate that is largely unaffected by the policies of the Fed.
Answer: B
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The divergence between money costs and opportunity costs is the least in which of the following situations?
a. China uses millions of otherwise unemployable workers to build roads with picks and shovels. b. Wilhelm, an engineer at Exxon, is drafted-his army salary is $2,000 per month. c. Colleen quits her job to stay at home and raise her children. d. A university, using a private contractor, builds a field house on land it purchased at full market value from a local farmer.
What is Jim's opportunity cost of operating his own business?
a. the total amount of money he puts into capital equipment b. the value of his labor that is put into the business c. the cost of hiring his laborers d. All of the above are correct.