Money that some authority has declared legal tender is called
A) fiat money.
B) currency.
C) convertible paper money.
D) commodity money.Q
Answer: A) fiat money.
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If, after a deposit outflow, a bank needs an additional $3 million to meet its reserve requirements, the bank can
A) reduce deposits by $3 million. B) increase loans by $3 million. C) sell $3 million of securities. D) repay its discount loans from the Fed.
Only when budget deficits are financed by money creation does the increased government spending lead to ________ in the ________
A) a decrease; monetary base B) an increase; monetary base C) a decrease; money multiplier D) an increase; money multiplier
What is the measure of responsiveness of quantity demanded of a product to a change in its price? Why is it a negative number for a typical good? With the help of suitable diagrams, explain the difference between elastic and inelastic demand.
What will be an ideal response?
A contestable market is one where there are few if any barriers to entry.
Answer the following statement true (T) or false (F)