The opportunity cost of holding excess reserves is equal to
A) the federal funds rate.
B) the federal funds rate minus the discount rate.
C) the discount rate.
D) none of the above.
Answer: D) none of the above.
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The figure above illustrates the marginal benefit and marginal cost of different quantities of national defense. What is the political equilibrium if voters are well informed?
A) 0 units B) between 0 and 3 units C) 3 units D) 5 units
Janie decides to give up her $200,000 a year job as the producer of the most popular television news show in Seattle in order to cultivate and sell orchids, which she anticipates will yield her an annual income of $30,000 . To an economist,
a. she may be mother earth, but she's not making a rational economic decision b. it is impossible to comment on her decision because we can't engage in interpersonal comparisons of utility c. her total utility will fall d. there is no doubt that the utility she gains from working with orchids must be greater than the utility she gains working as a television producer e. it is clear that working has a negative utility for her