To make things simpler and focus attention on what really matters, economists:
A. use assumptions.
B. ignore all variables.
C. think at the margin.
D. respond to incentives.
Answer: A
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There are several government agencies in the United States that regularly check the balance sheets of banks. This is done to ensure that: a. banks take on risky projects that will earn high returns. b. banks have a positive net worth. c. banks earn sufficient profits
d. banks lend to customers with poor credit ratings.
In Keynes' view, labor unions would resist wage cuts, but individual employees would go along with wage cuts initiated by his/her employer
Indicate whether the statement is true or false
If an economy produces 1,000 units of output with a price level of $1 and the money supply (M) is $500, velocity is:
A. 2. B. 5. C. 50. D. 500.
In a fractional reserve banking system
A. commercial banks are required to hold savings account in other banks as reserves against their deposits. B. commercial banks are required to hold a certain fraction of their deposits in reserves. C. all deposits must be held in reserves. D. commercial banks hold no deposits in reserve.