The official policy of Lolita’s government is that while some consumption is good, a significant percentage of a person’s earnings should be saved. Why is this policy good for economic growth?
a. It prevents money from leaving the country.
b. It reduces consumption of scarce natural resources.
c. Saving is a form of human capital.
d. Saving leads to more investment and capital formation.
d. Saving leads to more investment and capital formation.
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European banks began with
A. Monarchs were the first bankers, lending out cash to help the poor learn a craft.
B. Churches were the first bankers, lending out cash to help the poor learn a craft.
C. Goldsmiths were the first bankers, and the paper receipts they issued for gold held on deposit became valued as money.
D. Fishermen were the first bankers, and the paper receipts they issued for fish they stored in the hulls of their ships became valued as money.
The supply-of-money curve is almost perfectly inelastic because:
a. as interest rates rise, people will want to be supplied with more loans b. the Fed makes more money available in response to higher interest rates. c. banks generally find loans more profitable than keeping their assets as cash in their vaults or reserve deposits at the Fed, whether interest rates are 4% or 10%. d. the Fed lowers the discount rate as interest rates rise.
Define the following terms briefly and concisely
a. stock b. bond c. portfolio diversification d. speculation e. random walk
Alan is sitting in a bar drinking beers that cost $4 each. According to the economic decision rule, Alan will stop drinking when the marginal:
A. cost remains at $4. B. benefit to him of an additional beer is less than $4. C. cost to him of an additional beer is less than the marginal benefit. D. benefit to him of an additional beer is greater than $4.