Assume that Johnson deposits $350 of currency in his account in the XYZ Bank. Later the same day Swanson negotiates a loan for $2,000 at the same bank. In what direction and by what amounts has the supply of money changed?
A. Decreased by $1,650.
B. Increased by $2,000.
C. Increased by $2,350.
D. Decreased by $350.
Answer: B
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Putting quarters into a Las Vegas slot machine and receiving quarters out of that machine is analogous to the circular flow model because
a. the value of the resources flowing into firms is precisely the value of the goods and services flowing out of firms b. the value of the components of national income flowing into the firms is precisely the value of consumption and investment flowing out of the firms c. the absolute dollar amount of the production goods going out from the firms equals the absolute dollar amount of the consumption goods that households consume d. households gamble e. you can then substitute the casino economy for the get-rich-quick schemes that are all too prevalent in the economy today
The key assumption of the capital asset pricing model is that an investor cares only about his portfolio's
a. degree of diversification. b. expected income. c. level of risk. d. expected return and standard deviation.
The principle of specialization and exchange implies that
a. total production is highest when individuals specialize according to their absolute advantages b. productive inefficiency increases as producers in society specialize c. exchange can only occur when there is specialization in the economy d. gains from specialization will only occur when society is operating at a point along its production possibilities frontier e. total production is highest when individuals specialize according to their comparative advantages
The part of consumption that is determined by income is referred to as autonomous consumption
a. True b. False