The government's role of lender of last resort is directed to:
A. developing countries that are trying to build their financial systems.
B. depositors; this is role the government plays when they insure depositors' balances in banks that fail.
C. large manufacturing firms that employ thousands of people.
D. banks that experience sudden deposit outflows.
Answer: D
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If supply and demand both decrease, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. lower; lower B. higher; higher C. lower; uncertain D. uncertain; lower
"Supply creates its own demand" implies that
A) the very act of supplying a particular level of goods and services will not necessarily equal the level of goods and services demanded. B) the very act of demanding a particular level of goods and services necessarily equals the level of goods and services supplied. C) the very act of supplying a particular level of goods and services necessarily equals the level of goods and services demanded. D) the government will buy up any surplus of goods and services in a country to avoid economic problems.
Figure 11-8
Given the average cost curve shown in Figure 11-8 for dry cleaning, where Q1 is the quantity demanded in a small town, and Q2 for a larger town, you would expect dry cleaning to be a monopoly
A. in a small town, but not a large one. B. in both large and small towns. C. in a large town, but not a small one. D. only if the process is patented.
One of the economic costs of holding currency is that
A. it fulfills no transactions role. B. its real value always increases. C. it fulfills no precautionary role. D. it earns no interest income.