What are the advantages of a fractional reserve banking system compared to a system that requires 100 percent of deposits to be kept on reserve?
If a bank must keep all of its deposits as reserves, the money supply is simply the currency in circulation plus the currency deposited in banks. A fractional reserve banking system allows the bank to lend part of its deposits, which leads to the creation of money. Banks, therefore, can earn income by lending under a fractional reserve system.
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A rightward shift of the money supply ________
A) may come about from an increase in the quantity of money supplied by the Federal Reserve B) may come about from a decrease in the price level C) leads to a decrease in interest rates ceteris paribus D) all of the above E) none of the above
Refer to the figure below. What would be the impact on the three categories of people if they were given the value of medical insurance in cash instead of having it provided?
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Checks are
What will be an ideal response?