The economic value which can be created by a transaction between two people, Ed (seller) and Luis (buyer), is $50 as Ed's opportunity cost of selling is $135 and Luis' valuation of the good is $185 . Suppose Ed and Luis do not speak the same language and Ed hires an interpreter who charges $2 per hour. Ed and Luis finally agree to a price of $160 . This implies:
a. Luis' valuation of the good will increase.
b. Ed's opportunity cost will decline.
c. economic value from the transaction will decline.
d. Ed will receive to a lower benefit than Luis.
D
Economics
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Immediately after the Federal Reserve buys government securities,
A) bank excess reserves rise. B) bank excess reserves fall. C) bank capital rises. D) bank capital falls.
Economics
A reason that the quantity theory of money has lost favor is that:
A. the federal funds market has been taken over by the Federal Reserve bank. B. the economy recently experienced an unexpected and deep recession. C. the quantity of money is better at predicting stock prices. D. money growth and inflation are no longer closely related.
Economics