Financial intermediaries make the allocation of resources more efficient by
A. Lending or investing the savings they hold.
B. Reducing search and information costs in the financial markets.
C. Transferring purchasing power from savers to dissavers.
D. Spreading risk out over many individuals.
Answer: B
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
If your nominal income is $80,000 and your real income in base year prices is $71,500, what is the CPI?
A) 106 B) 150 C) 112 D) 100 E) 89
Macro National Bank, a commercial bank, holds $1 million in vault cash, $15 million in government and corporate bonds, $40 million in demand deposits, $10 million on deposit with a Federal Reserve bank, and $8 million worth of property. What are Macro National Bank's total liabilities?
a. $40 million b. $48 million c. $50 million d. $51 million e. $65 million
The reason economists include only the value of final goods and services when they calculate GDP is that intermediate goods:
A. do not add to economic welfare. B. do not create value added. C. would be double counted otherwise. D. have no social value.