As more people in a developing country started using debit cards, banks installed more ATM machines, thereby benefitting all customers. This is an example of a(n) ________
A) network externality
B) pecuniary externality
C) adverse selection
D) moral hazard
A
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To maintain a functioning gold standard:
A) nations are obliged to exchange any amount of issued paper money for gold. B) paper money is not allowed; all transactions must be in coins or gold. C) the monetary authority cannot exchange currency for gold. D) care must be taken to keep inflation under 10%.
Given that most people like the smell of baking cinnamon rolls and dislike the smell of burning tires, baking cinnamon rolls generates ________ externality, and burning tires generates ________ externality.
A. no; a negative B. a positive, no C. a positive; a negative D. a negative; a positive
The monetarists think that the growth of the money supply should be approximately equal to the growth of ____________.
Fill in the blank(s) with the appropriate word(s).
Mr. Pierpont has wealth of $200,000. He wants to keep at least $80,000 in bonds at all times, and will shift $10,000 into bonds from his checking account for each percentage point that the interest rate on bonds exceeds the interest rate on his checking account. Currently, he keeps $100,000 in bonds, which pay him 7%. What is the current interest rate on checking accounts?
A. 5% B. 9% C. 10% D. 7%