Suppose the interest rate is 7 percent. Consider four payment options: Option A: $500 today. Option B: $550 one year from today. Option C: $575 two years from today. Option D: $600 three years from today. Which of the payments has the lowest present value today?

The introduction of a new good

a. increases the cost of maintaining the same level of economic well-being. b. decreases the cost of maintaining the same level of economic well-being. c. has no impact on the cost of maintaining the same level of economic well-being. d. may increase or decrease the cost of maintaining the same level of economic well-being, depending on how expensive the new good is.

How is the Federal funds rate established? What role does the Federal Reserve play?

What will be an ideal response?