Leakages are offset by investment and government spending in the circular flow model.
Answer the following statement true (T) or false (F)
True
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A goldsmith with 100 gold coins in his safe and 100 receipts in circulation has a reserve rate of _______%.
Fill in the blank(s) with the appropriate word(s).
Interest rates adjusted for the effects of inflation
a. and inflation are nominal variables. b. and inflation are real variables. c. are real variables; inflation is a nominal variable. d. are nominal variables; inflation is a real variable.
Which of the following is true of protectionism?
A) It lowers prices for domestic consumers and increases social surplus. B) It increases prices for domestic consumers and also increases social surplus. C) It increases prices for domestic consumers and lowers social surplus. D) It lowers prices for domestic consumers and also reduces social surplus.
When the Fed raises the discount rate, it:
a. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public. b. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public. c. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public. d. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public. e. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.