What happens to the present value of $1 one year from now if the market rate of interest falls? Explain
What will be an ideal response?
If the interest rate falls, the present value of $1 one year from now will increase. If the interest rate is lower, the amount you would have to set aside today to end up with $1 one year from now would be higher.
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Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a complement for oatmeal. Which of the following increases the demand for oatmeal?
A) an increase in the price of raisins B) a decrease in income C) a decrease in population D) an increase in the price of cold cereal
Which of the following is not a function of the Federal Reserve System, or the "Fed"?
A) acting as a lender of last resort B) acting as a banker's bank C) taking actions to control the money supply D) insuring deposits in the banking system E) performing check clearing services