A bank cannot create money unless its ________
A) required reserves are greater than actual reserves
B) excess reserves are zero
C) desired reserves are greater than actual reserves
D) excess reserves equal deposits multiplied by the reserve ratio
C
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What is a fiduciary monetary system?
What will be an ideal response?
A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives. To maximize total utility, therefore, the government
a. would never tax labor income. b. must always achieve a fully egalitarian society. c. enacts policies that only benefit the middle class. d. stops short of a fully egalitarian society.
In the above figure, if we start at AD1 and SRAS1, and the money supply increases unexpectedly, what causes the economy to get to the long-run equilibrium?
A. People's expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift rightward. B. People's expectations will revise after a short-run loss in output, wages will fall, and SRAS will shift leftward. C. People's expectations will revise after a short-run gain in output, wages will fall, and SRAS will shift leftward. D. People's expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift leftward.
Using Figure 1.5 above, you can tell that 
A. there is increasing opportunity cost. B. the technology does not exist to produce 4 units of soda and 1 unit of pizza. C. there is unemployment. D. the technology does not exist to produce 3 units of soda and 3 units of pizza.