Corporations are able to raise large amounts of financial capital because
A) of the tax breaks corporations are given relative to partnerships or proprietorships.
B) of the elimination of the problem of separation of ownership and control.
C) of limited liability and the treatment of a corporation as an individual entity.
D) of their greater ability to monitor the performance of decision makers.
Answer: C
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Suppose that you deposit $2,000 in your bank and the required reserve ratio is 10 percent. The maximum loan your bank can made as a direct result of your deposit is
A) $200. B) $1,800. C) $2,000. D) $20,000.
We say that a good has elastic demand whenever the absolute value of the price elasticity of demand is greater than 1. A 1 percent change in price therefore causes
A) exactly a 1 percent change in the quantity demanded. B) a change of less than 1 percent in the quantity demanded. C) a greater than 1 percent change in quantity demanded. D) a change that cannot be determined based on 1 percent.
If the FOMC purchases government bonds priced at $5,000 from a bond dealer who banks at National Bank, and if the reserve requirement is 20 percent, then the required reserves of National Bank:
a. increase by $5,000. b. increase by $4,000. c. increase by $1,000. d. decrease by $5,000. e. decrease by $1,000.
The major determinant of an individual's income is
a. how much she enjoys the work. b. how productive she is combined with demand for what she produces. c. whether or not her family is wealthy. d. how well she gets along with her co-workers and boss.