When an individual deposits currency into a checking account:
A. bank reserves decrease, which reduces the amount banks can lend and reduces the growth of the money supply.
B. bank liabilities increase, which reduces the amount banks can lend and reduces the growth of the money supply.
C. bank reserves are unchanged.
D. bank reserves increase, which allows banks to lend more and increases the money supply.
Answer: D
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Central banks get the purchasing power to make discount loans by:
a. Reducing currency in circulation. b. Buying government securities. c. Taking loans from the government. d. Increasing their liabilities in the form of deposits from banks.
Which of the following was an effect of the creation of the euro evident during 2001-2007?
A. It led to the monopolization of the foreign exchange market by the euro. B. Housing prices dipped to an all-time low in the richer member nations. C. The poorer member nations saw relatively rapid economic growth. D. Several southern European countries saw an economic downturn.
Surplus refers to:
A. a way of measuring who benefits from transactions and by how much. B. the difference between the price the seller would have accepted and the actual sell price. C. the difference between the price the buyer would have paid and the actual price paid. D. All of these statements are true.
Inflation caused by continually decreasing short-run aggregate supply is
A) demand-pull inflation. B) demand-push inflation. C) cost-push inflation. D) cost-pull inflation.