The money multiplier yielded by the deposit creation formula assumes that
a. banks hold no excess reserves.
b. banks hold excess reserves.
c. recipients of loans take some of the proceeds in cash.
d. recipients of loans do not redeposit their funds in other banks.
a
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A currency drain occurs because people want to hold some of their money as currency rather than as deposits
Indicate whether the statement is true or false
Which elasticity measures producers' responsiveness to a change in price?
A. Price elasticity of demand B. Cross-price elasticity C. Price elasticity of supply D. Income elasticity of supply
The notion that specialization in goods that one can produce at a low opportunity cost will make it possible for trading partners to produce a larger joint output is called
a. the law of absolute advantage. b. the law of comparative advantage. c. the law of production possibilities. d. the exchange maximum principle.
When a tax is placed on a product, the price paid by buyers
a. rises, and the price received by sellers rises. b. rises, and the price received by sellers falls. c. falls, and the price received by sellers rises. d. falls, and the price received by sellers falls.