What is one significant characteristic of fractional reserve banking?
A. Bank loans will be equal to the amount of gold on deposit.
B. Banks hold a fraction of their loans in reserve.
C. Banks can create money through lending their reserves.
D. Banks use deposit insurance for loans to customers.
Answer: C
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If the marginal productivity of labor is constant for all levels of output, then the average productivity of labor
A) is constant. B) equals the marginal productivity of labor. C) Both A and B above. D) Either A or B above but not both.
When production does not proceed on the basis of comparative advantage, resources are expended on their most efficient uses
a. True b. False Indicate whether the statement is true or false
Which of the following did Thomas Malthus believe would make sustained economic growth and the achievement of high income levels impossible?
a. rapid growth of government spending b. the expansion of political democracy c. the expansion of communism to the developed world d. growth of population
Supply-side economists believe that, in general,
A. by raising tax rates we can raise tax revenue. B. by lowering tax rates we can raise tax revenue. C. tax rates have very little effect on tax revenue. D. tax rates are much too low.