Suppose that a firm can invest $100 today in a project and receive $105 a year from today. There is no inflation, and the annual interest rate in the economy is 4%. The firm should
A) invest in the project because the opportunity cost is the same as the return on the investment.
B) invest in the project because the opportunity cost is greater than the return on the investment.
C) invest in the project because the opportunity cost is less than the return on the investment.
D) not invest in the project because the opportunity cost is less than the return on the investment.
C
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Which of the following statements about the Fed is not true?
a. It serves as the bankers' bank for member banks. b. It can, and on occasion does, control interest rates. c. It uses open market operations to control the economy's money supply. d. It changes the legal reserve requirement less frequently than it changes the discount rate. e. It changes the legal reserve requirement more frequently than it changes the discount rate.
Railroads, automobiles, television, computers, and genetic engineering are all examples of new industries that are believed by many economists to have triggered
a. innovation cycles b. all internal cycles c. all external cycles d. short-run cycles e. multiple-investment cycles