If the money multiplier is approximated to be 10, it means:
A. banks create approximately 10 times the amount of cash in the economy.
B. the economy overall has 10 times the amount of deposits as existing cash.
C. banks create 10 dollars in deposits from each original deposit of a dollar.
D. All of these are true.
Answer: D
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Why does an increase in the price level tend to cause the consumption function to shift downward?
a. An increase in the price level decreases disposable income. b. An increase in the price level increases the demand for fixed money assets. c. An increase in the price level decreases the value of fixed money assets. d. An increase in the price level decreases saving and increases debt.
The international agreement that was aimed specifically at ozone depletion is the
a. Kyoto Protocol b. Montreal Protocol c. Rio Declaration d. London Convention 1972
When a third party pays a larger and larger share of the purchasing price of a good, economic theory indicates that the
a. demand for the good will decline. b. consumers of the good will have less and less incentive to economize on its use. c. suppliers of the good will have a stronger incentive to provide the good at low prices. d. prices of the good will tend to decline with the passage of time.