An advantage that money has over other assets is that it:
A. is a safer asset to hold during times of inflation.
B. provides a higher return to the owner.
C. increases in value over time.
D. has lower transaction costs to use as a means of payment than other assets.
Answer: D
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Accounting profit minus implicit costs equals:
A. explicit costs. B. economic profit. C. fixed costs. D. total revenues.
If the government knew the precise values of the multiplier and potential income, fine-tuning the economy would
A. be much easier, but mistakes would still occur occasionally. B. still be very difficult. C. be possible. D. be more difficult.
Which of the following arguments for protection is derived from the fact that funding of public goods in some countries is difficult given little or no means to collect income or sales taxes?
A. The developing government argument B. The national defense argument C. The infant industry argument D. The dying industry argument
Refer to the given data. If the Fed increased the reserve requirement from 20 percent to 25 percent, a deficiency of reserves in the commercial banking system of _____ would occur and the monetary multiplier would fall to ____.
Answer the question on the basis of the following consolidated balance sheet of the commercial banking system. Assume that the reserve requirement is 20 percent. All figures are in billions and each question should be answered independently of changes specified in all preceding ones.
A. $50 billion; 5
B. $10 billion; 4
C. $50 billion; 4
D. $10 billion; 8