The fractional reserve system of banking evolved because
a. goldsmiths did not have safes large enough to hold all their gold deposits.
b. there was always a dire need for additional money.
c. goldsmiths knew that on any given day, only a few depositors would come to claim their deposits.
d. goldsmiths knew that they would not be prosecuted for lending out money they did not have.
c
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Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?
a. Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. b. Domestic furniture producers will gain producer surplus. c. Domestic furniture producers will have a higher rate of technological advance. d. Domestic furniture producers will have more market power.
If Option A costs $40 and yields 20 units of output and Option B costs $50 and yields 30 units of output,
A) Option B and Option A are equally economically efficient. B) Option B is economically efficient relative to Option A. C) Option A is economically efficient relative to Option B. D) It is not possible to determine which option is more economically efficient.
If the interest rate is 25%, but cash flows change such that the investment renders a cash flow of $500 in year 1 and $800 in year 2 instead of year 3, would the investment take place?
a. Yes since NPV>0 b. No since NPV<0 c. Yes since the present value of the cash flows is greater than zero d. No since the present value of the cash flows is lesser than zero
Which of the following best characterizes the main difference between the Consumer Price Index (CPI) and the GDP deflator?
a. One is more accurate than the other. b. One is more useful than the other. c. One is more general than the other. d. One is more trend-focused than the other.