A temporary resource price differential refers to a price difference
a. that will not lead to a shift of resources among users
b. caused by lack of resource mobility
c. caused by economic rent
d. that, for example, causes more workers to move to higher-paid areas
e. caused by minimum wage legislation
D
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A bank manager advises all of his loan officers that the average cost of funds for the bank over the past year has been 6%. The bank has borrowed $1 million at 5%, another $1 million at 6% and another $1 million at 7%
Future borrowing costs are expected to continue at 7%. The manager however, instructs his loan officers that they are authorized to make loans at interest rates that are equal to or greater than the bank's average cost of borrowing. How would you evaluate the bank manager's decision?
The federal funds rate is
A) the interest rate paid on reserves held with the Fed. B) the interest rate at which banks can borrow excess reserves from other banks. C) the interest rate on bonds issued by the federal government. D) none of the above.