the banking system in the United States creates money through the combination of excess reserves and
What will be an ideal response?
banks loaning excess reserves
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Suppose you know I am only about consumption this year and consumption next year. Suppose also that I have an income this year but do not expect to have an income next year. Explain your answers. ? a. You notice that I save more after the interest rate falls. Can you tell whether "consumption now" is a normal, inferior or Giffen good? ? b. Suppose I also received an unexpected raise at work and you overhear me say: "Cool, I am even Steven. Now that I have my raise, I am just as happy as I was before the interest rate fell and I did not yet have a raise." Without knowing anything more, can you tell whether I consume more or less next year than I would have consumed had neither of the two changes happened?
What will be an ideal response?
In game theory, a strategy
A) is useless, because firms are subject to bounded rationality. B) is useful in static games, but not in dynamic games. C) defines the specific actions a firm will make. D) determines the payoff matrix of the game.
Nervous Norman holds 70% of his assets in cash, earning 0%, and 30% of his assets in an insured savings account, earning 2%. The expected return on his portfolio
A) is 0%. B) is 0.6% C) is 1%. D) is 2%. E) cannot be determined without knowing what the dollar value of his assets is.
Deadweight loss is the net loss of:
a. consumer surplus. b. producer surplus. c. disequilibrium surplus. d. both a and b.