Which statement about loans is true?
a. Banks use their secondary reserves to make loans.
b. When banks loan money to borrowers, they make the economy more liquid.
c. By creating loans, banks decrease demand deposits.
d. When a loan is made, the borrower experiences an increase in wealth.
b. When banks loan money to borrowers, they make the economy more liquid.
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Assuming that dry cleaning is a normal good, an increase in consumer income, other things being equal, will:
a. increase the demand for dry cleaning. b. decrease the demand for dry cleaning. c. increase the quantity demanded of dry cleaning. d. decrease the quantity of dry cleaning demanded.
If the MPC = 1, the spending multiplier is:
A. infinite. B. zero. C. 1. D. 10.
If the supply curve of a commodity is upward sloping, and the producing country begins to export more in a pure free trade system, the domestic price of the commodity will
A. fall. B. rise. C. exceed the price in foreign countries. D. be below the price in foreign countries.
For a change to be potentially efficient, no one can be made worse off.
Answer the following statement true (T) or false (F)