Banks do NOT need to keep all of their deposits on hand as reserves because
A. they can always generate new reserves through the money creation process.
B. only a fraction of deposits are withdrawn at any one time.
C. FDIC protects banks from excessive withdrawal demands.
D. there is too much risk of bank robberies.
Answer: B
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The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $5.50 per hour?
A) unemployment equal to 400 hours B) unemployment equal to 200 hours C) a shortage of 400 hours D) nothing because the minimum wage has no effect on the equilibrium price and quantity
The largest value the Herfindahl index can have is
a. 100, which would indicate a monopoly b. 100 for firms equal in size c. 100,000 d. 10,000 . which would indicate a pure monopoly e. infinity
Inefficient resource allocation is a major problem with monopolies
a. True b. False Indicate whether the statement is true or false
Developing countries do:
A. compete with one another for foreign investment, and this competition reduces the benefits from foreign investment. B. not compete with one another for foreign investment, because they have sufficient domestic saving to finance their investment needs. C. not compete with one another for foreign investment, because they lack the infrastructure to attract it in the first place. D. compete with one another for foreign investment, but this competition is beneficial to developing countries because it insures a more efficient allocation of resources.