To promote economic efficiency, government should

A. keep all prices as low as possible.
B. keep all prices high so that people will save more money.
C. allow the market to set low prices for abundant goods and high prices for scarce goods.
D. never interfere with firms’ price setting powers.


Answer: C

Economics

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The currency drain reduces the amount of

A) reserves available to banks to make loans. B) currency the Fed has outstanding in the economy. C) currency available for banks to borrow from the Fed. D) the monetary base. E) open market operations the Fed can make.

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The fraction that banks must, by law, hold as reserves against the checking deposits of their customers is called the

a. federal deposit insurance premium. b. vault cash quota. c. excess reserve requirement. d. required reserve ratio.

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Assume you pay a premium of $0.50/bu for a soybean call option with a strike price of $9.20/bu and that the current futures price is $8.90/bu. What is the option's current intrinsic value?

A. $0.50/bu B. $0.30/bu C. $0/bu D. $-0.50/bu

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The U.S.'s high trade deficit must be balanced by:

A. high net capital outflows. B. low net capital outflows. C. net capital inflows. D. None of these statements is true.

Economics