Other things the same, an increase in the U.S. interest rate causes the quantity of loanable funds supplied to
a. rise because national saving rises.
b. rise because domestic investment rises.
c. fall because national saving falls.
d. fall because domestic investment falls.
a
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The EEC stands for the
a. European Economic Community b. Enactment of Economic Cooperation c. Enforcement of Efficient Commerce d. Energy Efficient Commitment e. Economic Enforcement Compact
Suppose the Fed purchases $40,000 of U.S. Treasury bonds from Benjamin, who deposits the money with First National Bank. If the required reserve ratio is 20 percent, this transaction will increase the excess reserves of First National Bank by
a. $8,000. b. $32,000. c. $40,000. d. $200,000.
According to the rational choice model, cash grants are preferred to food stamps because
A. food is the most essential commodity. B. they enhance consumer choice. C. cash grants allow consumers to reach lower indifference curves. D. food would be cheaper to buy with cash.
The increase in the demand for widgets, shown in the figure above, is the result of an increase in people's incomes from $28,500 per year to $31,500 per year. Therefore, the income elasticity of demand for widgets is
A) 0.25. B) 0.75. C) 1.33. D) 4.00.