If the Federal Reserve lowers the required reserve ratio, people ...

[Hungry!]

If the Federal Reserve lowers the required reserve ratio, people will end up taking out ________ because the interest rates ________.
 
  A) more loans; will rise
  B) the same number of loans; will not change
  C) more loans; will fall
  D) fewer loans; will rise
  E) fewer loans; are controlled by the economic conditions alone

Question 2

Why is the benefit of something measured by what you are willing to give up?
 
  What will be an ideal response?

[softEldritch]

Answer to Question 1

C

Answer to Question 2

The benefit of a good or service, say a slice of pizza, is the pleasure it brings the consumer. But it is impossible to measure someone's pleasure. In order to measure the benefit of the slice of pizza, we need something that we can measure. Thus, to measure the benefit of the slice of pizza, we ask the consumer what he or she is willing to give up to get the slice of pizza. So, if the consumer was willing to give up, say, three hot dogs to get the slice of pizza, we can determine that the benefit of the slice of pizza to the consumer is three hot dogs.