Choosing to Study for an Exam Until the Extra Benefit

question 5

Multiple Choice

Choosing to study for an exam until the extra benefit (e.g., improved score) equals the extra cost (e.g., the value of foregone activities) is:

• A)not an economic choice.
• B)an application of the Cost-Benefit Principle.
• C)an application of the Scarcity Principle.
• D)not rational because it ignores the importance of total benefits and total costs.

---

Definitions:

Federal Reserve

The central banking system of the United States, responsible for monetary policy, including regulating banks, managing inflation, and influencing interest rates.

Federal Open Market Committee

The branch of the Federal Reserve System responsible for overseeing the nation's open market operations and making key decisions about interest rates and the growth of the United States money supply.

Discount Rate

The interest rate charged by central banks on loans and advances to commercial banks and other financial institutions.

Reserve Requirements

Reserve requirements are central bank regulations that set the minimum amount of reserves that commercial banks must hold, either in their vaults or deposited with the central bank, as a percentage of their deposit liabilities.