Suppose you withdraw $1,000 in cash from your checking account. Draw a T-account to show the effect of this transaction on your bank's balance sheet
What will be an ideal response?
The withdrawal of $1,000 from your checking account will reduce the bank's checking account deposits and reserves by $1,000.
Assets Liabilities
Reserves -$1,000 Deposits -$1,000
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Explain the connection between opportunity cost and the PPF
What will be an ideal response?
The "new product bias" in the consumer price index refers to the idea that
A) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. B) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. C) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers. D) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers.
Gasoline prices in the United States decreased significantly between 2008 and 2009. A decrease in the price of gasoline, holding other things constant, will cause which of the following to occur?
A) increase the demand for gasoline. B) decrease the demand for gasoline. C) increase the quantity of gasoline demanded. D) decrease the quantity of gasoline demanded.
When the indifference curve is tangent to the budget constraint,
a. a consumer cannot be made better off without an increase in her income or a price decrease in one of the goods she consumes. b. the consumer is likely to be at a sub-optimal level of consumption. c. income is at its optimum for a consumer. d. indifference curves are likely to intersect.