What limits the quantity of money that the banking system can create?
What will be an ideal response?
The quantity of money that the banking system can create is limited by: the monetary base, desired reserves, and desired currency holdings.
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Assuming all else equal, if the production technology available to a nation improves, its aggregate production function:
A) shifts inward. B) becomes vertical. C) shifts upward. D) becomes horizontal.
The above figure shows the PPF for a country that produces computers and computer factories. Which of the following would most likely shift the PPF from PPF0 in one year to PPF1 in the next?
A) Nothing, because the PPF does not shift. B) Increase the production of computers from 9 million (at point C) to 11 million (at point B). C) Decrease the production of computers from 11 million (at point B) to 9 million (at point C) and build 9 new computer factories. D) Increase consumption of both computers and computer factories. E) Decrease production of both computers and computer factories by moving into the interior of the PPF.
A decrease in the excess reserves banks want to hold, together with people depositing currency into their demand deposit accounts, would: a. increase the money supply
b. decrease the money supply. c. leave the money supply unchanged. d. have an indeterminate effect on the money supply.
When public choice economists look at labor markets, they:
A. see individuals lobbying politicians to protect their monopolies. B. generally see supply and demand forces leading to equilibrium. C. capture the same aspects of reality that are captured by other economists. D. focus on the tensions among social classes and generally see exploitation of workers by capitalists.