Use the Following to Answer Questions

question 289

Multiple Choice

Use the following to answer questions :
Figure: Comparative Advantage
Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods.
-(Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of peaches for Westland is _____ box(es) of oranges.

• A)1
• B)0.25
• C)4
• D)10

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Definitions:

Bank Runs

A situation where a large number of a bank's depositors try to withdraw their funds simultaneously over concerns about the bank's solvency.

Reserve Banking

A banking system in which banks hold a fraction of their deposits in reserve, while lending out the remainder to generate profits.

Federal Funds Rate

The interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, on an uncollateralized basis.

Reserve Requirement

A regulatory mandate on banks to hold a certain percentage of their deposits in reserve either in their vaults or at the central bank.