A checking account balance in a commercial bank is
A. an asset readily usable for most transactions.
B. part of the currency supply.
C. not liquid enough to be considered money.
D. a time deposit.
Answer: A
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The income elasticity of demand is a measure of
A) how demand for a product changes when the price of a substitute or complement product changes. B) how responsive consumers are to changes in the price of a product. C) how responsive suppliers are to changes in the price of a product. D) the extent to which the demand for a good changes when income changes. E) the extent to which the supply of a good changes when the demand changes as a result of a change in income.
Under flexible exchange rate, the response of an economy to a temporary fall in foreign demand for its exports is
A) the currency appreciates, and output falls. B) the currency depreciates, and output falls. C) the currency depreciates, and output increases. D) the currency depreciates, and output remains constant. E) the currency appreciates, and output increases.
Which of the following marginal costs might be incurred if society chose to pursue a zero-tolerance policy regarding crime?
a. Education funds would be diverted to crime prevention. b. Individual privacy protections would be strengthened. c. People would have to begin growing their own food. d. Fewer scarce resources would be used for prisons.
Why are transfer payments excluded from government expenditure in the national income accounts?
What will be an ideal response?