An individual bank can lend out at most its:
a. actual reserves.
b. fractional reserves.
c. legal reserves.
d. checkable deposits.
e. excess reserves.
e
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In periods of relatively high levels of unemployment, a classical economist would advocate which of the following governmental policies to move the economy toward full employment?
A. Wage and price controls B. None or a laissez-faire policy C. Fiscal policy D. Monetary policy
Which of the following is the best example of a long-run decision?
A. A business consulting firm considering whether to hire some interns to assist with research and data processing. B. A business consulting firm considering whether to add new computers while maintaining the same number of employees. C. An automobile manufacturing company considering whether to expand its existing workforce while keeping the same factory and equipment. D. An automobile manufacturing company considering whether to invest in robotic equipment to develop a more cost-effective production technique.
Consider an economy where the money supply is growing at 7 per cent per year and velocity is constant. Which of the following statements about real GDP growth and the inflation rate could be TRUE if the Quantity Theory of Money holds?
A. Real GDP is growing at 2 per cent and inflation is 5 per cent. B. Real GDP is growing at 7 per cent and inflation is 7 per cent. C. Real GDP is growing at 2 per cent and inflation is 9 per cent. D. Real GDP is growing at 9 per cent and inflation is 2 per cent.
The slope of a typical production possibilities frontier reflects the fact that
A. some systems of market organization are more efficient than others. B. the invisible hand always functions smoothly in a market system without government intervention. C. when resources are allocated efficiently, it’s impossible to produce more of anything without producing less of something else. D. production is only possible when resources are allocated efficiently.