The price of borrowing is known as the:
A. equilibrium price.
B. interest rate.
C. transaction cost.
D. None of these is true.
B. interest rate.
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Required reserves are the amount of
A) reserves a bank must hold against its deposits as mandated by the Federal Reserve. B) cash a bank must hold against its deposits as mandated by the Federal Reserve. C) checkable deposits a bank must hold against all other deposits as mandated by the U.S. Treasury. D) reserves a bank must hold against all its assets as mandated by the Federal Reserve.
If real GDP falls from one period to another and the price level stays the same, we can conclude that
A. Nominal GDP also decreased. B. Inflation increased. C. Nominal GDP increased. D. NDP also decreased.
If the use of fossil fuels is harming our nation, according to the specificity rule the optimal policy to use to mitigate this harm is to
A. tax the consumption of fossil fuels. B. levy taxes on the extraction of coal and petroleum. C. subsidize research and development on alternate fuel sources. D. impose tariffs on the importation of fossil fuels.
Explain why a subsidy is inefficient
What will be an ideal response?