A system in which depository institutions hold reserves that are less than the amount of total deposits is called
A. fractional reserve banking.
B. required reserve banking.
C. fiat money banking.
D. central banking system.
Answer: A
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Because consumers value product variety
A) society must be more efficient with monopolistic competition than with perfect competition. B) the inefficiency and deadweight loss created by monopolistic competition is offset. C) in the long run, monopolistically competitive firms earn an economic profit. D) monopolistically competitive industries are efficient.
Signals solve the adverse selection problem
A) if the signal is an advertisement placed in the New York Times or other top-tier publication. B) only if the signal is viewed as credible. C) when the signal is expensive to produce. D) if the signaling firm is known to be a profit-maximizer.
Which statement is true?
A. Productivity only partially explains wage differentials. B. The reason why college graduates earn much more than high school graduates is that they have received very valuable job training in college. C. With almost no exceptions, the more productive you are, the more you earn. D. None of the statements are true.
Evaluate this statement: “A monopolistic ally competitive industry would be more efficient if there were fewer firms.”
What will be an ideal response?