If you are willing to sell your lawn mower business for $355,000 and someone offers you $420,000 for it, this transaction will generate:
a. There is no surplus created
b. $65,000 worth of seller surplus and unknown amount of buyer surplus
c. $30,000 worth of buyer surplus and $35,000 of seller surplus
d. $65,000 worth of buyer surplus and unknown amount of seller surplus
b
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Open market sale of government securities results in:
A) an increase in bank reserves. B) a decrease in bank reserves. C) a decrease in interest rates. D) none of the above.
Assume that the reserve requirement is 20 percent. First National Bank has vault cash and deposits with the Fed of $80 million, loans and securities of $320 million, and demand deposits of $400 million. First National:
a. could extend a maximum of $40 million of additional loans. b. could extend a maximum of $20 million of additional loans. c. could extend a maximum of $10 million of additional loans. d. is not in a position to extend additional loans.