Saving is equivalent to withdrawing financial capital from the market.
Answer the following statement true (T) or false (F)
False
Rationale: Saving is the equivalent to supplying financial capital to the market, since when saving, we put money into a financial account or a financial institution, which, in turn, loans the money to someone else, or uses it directly to finance some operation.
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The income elasticity of demand for food is roughly 1. A consumer's monthly income is $2,000, of which 20% is spent on food. If the income of this consumer doubles, the amount she'll spend on food will be
A. $800 per month. B. $1,000 per month. C. $500 per month. D. $400 per month.
Under adaptive expectations, the short-term effect of an unanticipated shift to a more expansionary macroeconomic policy will be a
a. temporary reduction in the unemployment rate. b. permanent reduction in the unemployment rate. c. temporary reduction in the inflation rate. d. permanent reduction in the inflation rate.
Suppose bank A has assets of 100, liabilities of 60, and capital of 40. Its capital ratio is
A) 40%. B) 66%. C) 25%. D) 60%.
Permanent declines in inflation such as those seen in Chile and Sweden must have been a result of:
A. less independence for their central banks. B. a change to targeting interest rates instead of inflation rates. C. a decrease in the central bank's inflation target. D. an increase in the central bank's inflation target.