Excess reserves are put to use by a bank when it
a. puts cash in the vault to back existing loans.
b. pays off the mortgage on its building.
c. sells government securities.
d. makes loans to its customers.
d
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The marginal product curve is a mirror image of
a. The average cost curve b. The average fixed cost curve c. The total cost curve d. The marginal cost curve
As national income increases, consumption spending increases as well, always by the same amount. That is, as national income increases, MPC remains constant, according to
a. Duesenberry's relative income hypothesis b. Keynes's absolute income hypothesis c. Friedman's permanent income hypothesis d. Modigliani's life-cycle hypothesis e. real asset theory
If a country experiences capital flight, which curves shift right?
a. the demand for loanable funds and the demand for its currency in the market for foreign-currency exchange b. the demand for loanable funds and the supply of its currency in the market for foreign-currency exchange c. the supply of loanable funds and the demand for its currency in the market for foreign-currency exchange d. the supply of loanable funds and the supply of its currency in the market for foreign-currency exchange
In the absence of externalities, what can be said about the invisible hand of the marketplace?
a) It induces people to act in a matter inconsistent with self-interest. b) It leads to a market outcome that maximizes total benefit to society. c) It increases the transaction costs of contracting between parties in an exchange. d) It is unable to resolve inherent inefficiencies in market system.