As a result of an open market purchase, bank reserves
A) rise and interest rates fall.
B) fall and interest rates rise.
C) and interest rates both rise.
D) and interest rates both fall.
A
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Legislators facing a close electoral contest will tend to favor
A) policies with benefits greater than costs for everyone. B) policies with benefits greater than costs for the majority. C) policies with benefits in the near future and deferred costs. D) policies representing the public interest.
Suppose the proportion of deposits that individuals wish to hold as cash were to rise from 5% to 10%. Then,
A) the money supply will rise because people have more cash. B) bank deposits will fall by the same amount as if the reserve-holding ratio had risen by 5 percentage points. C) the supply of high-powered money will rise because cash has risen. D) the money supply will change by the same amount as if the reserve-holding ratio had risen by 5 percentage points.
In any monetary system, the means of payment must be the same as the unit of value
a. True b. False
Answer the following statement(s) true (T) or false (F)
1. If both supply and demand change, the indeterminate variable could remain the same. 2. In a “free market,” a government agency makes decisions about what to produce. 3. Supply and demand are at the foundation of the market system. 4. Market controls provide a way for both buyers and sellers to communicate about the relative value of resources.