If a number of people suddenly deposit into their checking accounts a great deal of cash previously kept in their pockets or at home, other things constant, their actions will
a. create excess reserves and place banks in a position to extend additional loans, which will reduce the money supply.
b. create excess reserves and place banks in a position to extend additional loans, which will expand the money supply.
c. lead to higher interest rates.
d. force the Fed to reduce its discount rate.
B
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Flexible exchange rates exist when
A) no one knows what the true value of a currency is. B) governments and central banks spend foreign reserves to prop up an exchange rate at a certain level. C) exchange rates are determined by forces of supply and demand. D) speculators bet that a currency will soon be depreciated.
An expansionary gap generally creates inflationary pressure in an economy
a. True b. False Indicate whether the statement is true or false
A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect
a. the value of a good to society, but not the cost of making it. b. the cost of making a good to society, but not its value. c. both the value of a good to society and the cost of making it. d. neither the value of a good to society nor the cost of making it.
Household savings rates:
A. were fairly constant at about 5 %in the United States from 2000 to 2010. B. were roughly 5% in the United States in 2016. C. were 10% in the United States in 2016. D. have been roughly 15 % in the United States for the last 30 years or so.