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Author Question: If an increase in income leads to a decrease in the demand for salami, then salami is A) a ... (Read 107 times)

stephzh

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on: Jun 29, 2018
If an increase in income leads to a decrease in the demand for salami, then salami is
 
  A) a necessity. B) a neutral good. C) a normal good. D) an inferior good.

Question 2

Explain why the real interest rate is the opportunity cost of loanable funds.
 
  What will be an ideal response?


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verrinzo

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

The real interest rate is the opportunity cost of loanable funds because the real interest rate measures what is forgone by using the funds. If the funds are loaned, then the real interest rate is received. If the funds are borrowed, then the real interest is paid for the funds. The real interest rate forgone when funds are used either to buy consumption goods and services or to invest in new capital goods is the opportunity cost of not saving or not lending those funds.


stephzh

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Reply 2 on: Jun 29, 2018
Gracias!

parshano

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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