A lottery promises a $250,000 prize. But the prize money is paid out in $50,000 annual installments with the first installment received today.. The winner is offered the option of an immediate lump-sum payment. If the interest rate remains at 10 percent for the entire period, what is the smallest amount the winner should accept?

Which of the following is not one of the ways that banks reduce transaction costs for creditworthy borrowers?

a. coping with asymmetric information b. increasing risk through diversification c. enforcing loan contracts d. These are all ways banks reduce transaction costs

The Federal Reserve Bank attempted to deal with the sluggish aggregate demand that followed the housing market crash and subsequent financial crisis through:

A. contractionary fiscal policy. B. contractionary monetary policy. C. expansionary monetary policy. D. expansionary fiscal policy.