The principle which states that as more and more units of a variable resource are added to a set of fixed resources, the resulting additions to output eventually become increasingly smaller, is the principle of
a. increasing production.
b. functioning production.
c. diminishing marginal returns.
d. increasing returns to scale.
c. diminishing marginal returns.
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The monetary expansion process from an open market operation continues until
A) required reserves are eliminated. B) the Federal Reserve takes actions to stop the process. C) the discount rate is lower than market interest rates. D) excess bank reserves are eliminated.
Efficiency in risk bearing implies that
A) risk is completely eliminated. B) the least risk-averse party bears most of the risk. C) the most risk-averse party bears most of the risk. D) all of the risk is borne by just one of the parties regardless of the degree of risk aversion.
Price elasticity of demand measures the
A) slope of the demand curve. B) sensitivity of quantity demanded to changes in the price of substitute goods. C) sensitivity of price to changes in the quantity demanded of substitute goods. D) sensitivity of quantity demanded to changes in price.
Which of the following events would reduce the size of the "real-world" money multiplier?
a. Banks hold more excess reserves. b. Households hold less currency. c. The Fed increases the discount rate. d. The Fed reduces the required reserve ratio.