If the Bank of America lends $100 million and the reserve requirement is 10%, the monetary base:
a. Falls by $100 million.
b. Falls by $10 million.
c. Does not change.
d. Rises by $100 million.
e. Rises by $10 million.
.C
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Economic theory suggests that if natural resources can be held as private property, then
A) conservation will be nonexistent. B) owners will have an incentive not to abuse them. C) natural resources will be sold off for immediate use. D) people will simply hold them and refuse to make them available.
How does imperfect information affect market decisions?
a. It doesn't, because information is generally excellent. b. It leads to inefficient outcomes in which expected benefits and actual benefits diverge. c. It leads to wasteful attempts to improve information. d. It leads to exploitation of sellers by buyers.
When does a higher wage rate lead to an increase in the number of work hours supplied by laborers?
a. Always. b. When the substitution effect outweighs the income effect. c. When the income effect outweighs the substitution effect. d. Never.
The Federal Reserve
A. is not legally authorized to monitor or regulate complicated financial derivatives. B. should not have promoted the use of complicated financial derivatives the way it did during the financial crisis. C. did not pay close enough attention to derivatives in the period leading up to the financial crisis. D. could have prevented the financial crisis through the use of complicated financial derivatives.