The reason why the banking system can increase checkable deposits by a multiple of initial deposits is that:
A. reserves lost by any particular bank are gained by the Federal Reserve Bank.
B. the banking system must keep reserves equal to 100 percent of its checkable deposits.
C. the central bank follows policies that prevent reserves from falling below the level required by law.
D. borrowers often spend most of a loan which is then deposited.
Answer: D
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Which of the following would be most likely to cause an increase in the demand for gold?
A) A decrease in the price of gold B) The expectation of a future decrease in the price of gold C) An increase in the price of gold D) The expectation of a future increase in the price of gold E) An increase in the supply of gold
Refer to Figure 29-1. The French fall in love with California wines and triple their purchases of this beverage. Assuming all else remains constant, this would be represented as a movement from
A) A to D. B) A to B. C) B to A. D) B to C. E) C to D.
Everything else held constant, an increase in autonomous planned investment spending will cause the IS curve to shift to the ________ and aggregate demand will ________
A) right; increase B) right; decrease C) left; increase D) left; decrease
To the corporation, bonds are more risky than stocks because
a. interest rates fluctuate. b. bond interest is a fixed cost. c. investors prefer stocks to bonds. d. speculators manipulate bonds more than stocks.