What is the history behind the idea of a fractional reserve banking system?
What will be an ideal response?
Early traders used gold in making transactions. They realized that it was inconvenient and not safe to move gold for every transaction. So they deposited their gold with a goldsmith. The goldsmiths had safes for gold and precious metals, which they often kept for consumers and merchants. They issued receipts for these deposits. Receipts came to be used as money in place of gold because of their convenience. The goldsmiths became aware that the stored gold was never fully redeemed. The goldsmiths realized they could “loan” gold by issuing paper receipts to borrowers, who agreed to pay back gold plus interest. Such loans originated “fractional reserve banking,” because the actual gold in the vaults became only a fraction of the receipts held by borrowers and owners of gold.
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What is the effect on the equilibrium price and equilibrium quantity of orange juice if the price of apple juice decreases and the wage rate paid to orange grove workers increases?? The equilibrium price of orange juice ?______ and the equilibrium quantity? ______.
Fill in the blank(s) with the appropriate word(s).
Which of the following would be most likely to increase the quantity of money demanded?
a. A decrease in real income b. An increase in real income c. A decrease in the interest rate d. An increase in the cost of converting other assets into money e. An increase in the price level
How does inclusion of the current revenues and expenditures of the Social Security trust fund into the budget calculation affect the reported budget deficit of the federal government?
A. It increases the reported deficit. B. It reduces the reported deficit. C. It exerts no effect on the reported deficit. D. It increases the deficit during an economic boom but reduces it during a recession.
If a monopolist claims his profit-maximizing markup factor is 3, what is the corresponding price elasticity of demand?
A. ?2.5. B. ?3.0. C. ?2.0. D. ?1.5.