As commercial banks keep more excess reserves, what happens to money creation?
(A) It remains the same.
(B) It could either increase or decrease.
(C) It increases.
(D) It decreases.
Ans: (D) It decreases.
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A public good
A. is available to all and cannot be denied to anyone. B. is characterized by rivalry and excludability. C. can be profitably produced by private firms. D. produces no positive or negative externalities.
The Phillips Curve will shift when
A) the overall employment rate remains unchanged. B) the expected inflation rate changes. C) the price level falls. D) none of the above.
The difference between the economic and political functions of government is that
A) the economic function is concerned with the Federal Taxation system while the political function is not. B) the economic function is concerned with correcting for market failures while the political function is not. C) the economic function is concerned with the reallocation of income while the political function is not. D) the economic function encourages merit goods while the political function discourages demerit goods.
An efficiency loss (or deadweight loss):
A. is measured as the combined loss of consumer surplus and producer surplus. B. results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price. C. can result from underproduction, but not from overproduction. D. can result from overproduction, but not from underproduction.