Suppose you are a lender. The T-bill interest rate is 1.4%. If you do not lend t

Question

Suppose you are a lender. The T-bill interest rate is 1.4%. If you do not lend to a borrower during a round of the experiment, which one of the following would happen in that round?

A.  The computer would automatically purchase a T-bill for you, and you would have a loss of $14. B.  The computer would automatically purchase a T-bill for you, and you would have a gain of $1,000. C.  You will end up with neither a loan nor a T-bill, and your gain will be zero. D.  You will end up with neither a loan nor a T-bill, and you will have a loss of $14. E.  The computer would automatically purchase a T-bill for you, and you would have a gain of $14.

Explanation / Answer

C.  You will end up with neither a loan nor a T-bill, and your gain will be zero.

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