In a fractional reserve banking system:
A. the Federal Reserve has no control over the amount of money in circulation.
B. the monetary system must be backed by gold.
C. banks can create money through the lending process.
D. bank panics cannot occur.
Answer: C
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A straight-line production possibilities curve takes this shape because
A) the opportunity cost of producing a good is constant. B) the opportunity cost of producing more of a good is decreasing. C) resources are better suited for producing one output than another. D) resources are fixed.
If marginal utility of apples is diminishing and is a positive amount, consuming one more apple will cause
A) total utility to decrease. B) a consumer to get no satisfaction from consuming apples. C) a consumer's total utility to increase. D) a consumer to go beyond her optimal consumption of apples.
When consumers maximize utility, they are equating the ratio of total utility to price across all goods consumed.
Answer the following statement true (T) or false (F)
Refer to the two diagrams for individual firms. Figure 2 pertains to:
A. a market characterized by government regulation of price and output.
B. either an imperfectly competitive or a purely competitive seller.
C. a purely competitive seller.
D. an imperfectly competitive seller.