Many economists believe that a family bases its spending decisions on its permanent, or average, income rather than on transitory income
a. True
b. False
Indicate whether the statement is true or false
True
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Refer to the scenario above. What is the optimal strategy of each bidder?
A) Each bidder should bid up to his/her maximum willingness to pay for the necklace. B) Each bidder should bid above his/her maximum willingness to pay for the necklace. C) Each bidder should bid up to 9/10 of his/her valuation of the necklace. D) Each bidder should bid up to 4/5 of his/her valuation of the necklace.
In the mid-1990s, real interest rates fell in the United States. This was the result of budget deficit
A. increases and tighter monetary policy. B. increases and looser monetary policy. C. reductions and looser monetary policy. D. reductions and tighter monetary policy.
Which statement is true?
A. Entrepreneurial ability is considered a passive resource. B. All entrepreneurs are inventors. C. The entrepreneur has been the central figure in the long economic success in the U.S. D. The basic payment made to the owners of capital is rent.
Suppose that the bank has the following balance sheet:
Assets Liabilities Reserves $75,000 Deposits $500,000 Loans $430,000 Net worth $5,000 If the required reserve ratio is 10 percent, what is the maximum the bank can loan out? Suppose the bank makes this loan and the borrower spends the money, which is deposited in a different bank. Show the impact of these transactions on the bank's balance sheet. What will be an ideal response?