The money supply in Econland is 1,000, and currency held by the public equals bank reserves. The desired reserve-deposit ratio is 0.25. Bank reserves equal ________.
A. 800
B. 500
C. 200
D. 250
Answer: C
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The following question is an example of microeconomic analysis, "What determines the price of gasoline in a particular city or town?"
Indicate whether the statement is true or false
Suppose that equilibrium income is 3200 and the multiplier is 2.38. Equilibrium income would rise to 3400 if planned investment
A) rises by 84.03. B) rises by 476. C) falls by 84.03. D) falls by 476.
The last time you went on a road trip, you noticed that there were several fast food outlets clustered near some freeway exits, but none at the others. Now that you are familiar with Hotelling's model, you know that the reason for this is:
A. firms vying for a favorable location. B. the existence of fast food cartels. C. zoning laws. D. failure by the firms to correctly distribute themselves.
Suppose an LDC is producing on its production possibilities frontier such that it produces a subsistence level of consumption goods and enough capital goods just to replace the existing capital that depreciates. Foreign investment can lead to economic growth for this LDC in which of the following ways?
A. The LDC uses the investment to control inflation. B. The mere presence of more money in the economy will lead to economic growth. C. The LDC invests in consumption goods to move beyond the subsistence level this year. D. The LDC invests in additional capital such that the rate of capital formation exceeds the value of capital depreciated.