What is one significant characteristic of fractional reserve banking?
A. Banks hold a fraction of their loans in reserve
B. Banks use deposit insurance for loans to customers
C. Bank loans will be equal to the amount of gold on deposit
D. Banks can create money through lending their reserves
D. Banks can create money through lending their reserves
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Kevin is re-finishing an antique grandfather clock that he purchased at a flea market for $300. He expects to be able to sell the clock for $450
At the last minute, Kevin discovers that he needs to repair the gears at a cost of $175 to make the clock worth $450 to potential buyers. It turns out that he could also sell the clock now, without completing the additional repairs, for $250. What should Kevin do? A) He should sell the clock now for $250. B) He should keep the clock but not make the repairs since the original $300 is a sunk cost. C) He should complete the additional repairs and sell the clock for $450. D) He should keep the clock after making the repairs since it is not rational to spend a total of $475 on an item that can only be sold for $450. E) Kevin is indifferent between selling the clock as is or selling it after completing the repairs.
The Single European Act was expected to create economic benefits by reducing the costs and risks of currency market transactions
Indicate whether the statement is true or false
Adverse selection in insurance requires that
a. potential customers face different levels risk b. potential customers facing more risk are no more interested in purchasing insurance c. people are not risk averse d. insurers can tell higher risk people from lower risk people
Other things remaining the same, if a large part of the population decided against having soda for health reasons, there would be a(n):
a. increase in the quantity of soda supplied. b. increase in the quantity supplied of complements like fries and burgers. c. decrease in the price of soda. d. rightward shift of the demand curve for soda. e. decrease in the quantity demanded of substitutes like mineral water.