Anya has decided to start her own hair-styling salon. To purchase the necessary equipment, Anya withdrew $10,000 from her savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. What is Anya's annual opportunity cost of the financial capital that has been invested in the business?

What assumptions are made concerning wages and prices in a classical economic model?

What will be an ideal response?

Assume that you are a policy adviser who believes that money demand is highly interest-sensitive but investment is not. Asked your advice on how to pull the economy out of a recession, you are likely to emphasize

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