Explain why the money supply does NOT change when one individual writes a check to another
What will be an ideal response?
When one individual writes a check to another there is an offsetting increase and decrease to the money supply. The bank into which the check is deposited begins to expand the money supply but the bank that has lost a deposit begins to contract it. The net result is no change.
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Which of the following is characteristic of oligopoly, but NOT of monopolistic competition?
A) The choices made by one firm have a significant effect on other firms. B) Each firm faces a downward-sloping demand curve. C) Firms are profit-maximizers. D) There is more than one firm in the industry.
The major difference in the efficacy of monetary policy relative to fiscal policy is
A) the longer recognition lag for fiscal policy. B) the shorter recognition lag for fiscal policy. C) the longer legislative lag for fiscal policy. D) the longer data lag for fiscal policy.
Structures in the economy increase aggregate demand when the economy is in recession and decrease aggregate demand when the economy is inflationary are known as:
a. tax transfers. b. inventory investment. c. accelerators. d. depreciation. e. automatic stabilizers.
If we consider the savings, investment, and net exports in the United States in recent years, the gap between savings and investment is almost exactly:
A. the government deficit. B. the balance of payments. C. direct foreign investment. D. the trade balance.