The precautionary demand for money originates in
A. people's uncertainty and their desire for "mad money."
B. fear that prices will rise.
C. expectations of economic booms.
D. expectations of stock market crashes.
A. people's uncertainty and their desire for "mad money."
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The failure of a major financial company is often a trigger for a financial crisis. The main reason for trouble at a single firm to become a crisis for the entire economy is that ________
A) the central bank will suspend operations until the failed firm is restructured B) it is unclear whether the firm's collapse will remain an isolated event C) customers of the failed company will organize a boycott to protest their losses D) employees and owners of the failed company reduce their spending, with adverse effects on other businesses
On account of a massive construction boom in a country, the demand for iron ore increases substantially. This causes iron ore prices to escalate. Producers increase iron ore mining considerably in the short run, in spite of knowing that this will adversely affect future availability of ore. Which of the following is most similar to the scenario described above?
a. Corn producers hoard their supplies in order to induce a price hike. b. Petroleum manufacturers increase extraction in response to sky-rocketing fuel prices. c. The government of a country makes aforestation mandatory for lumber firms. d. Impressive revenue generation induces the government of a country to impose additional fuel surcharge. e. To discourage smoking, the government of a country increases sales tax on cigarettes.
Banks will never hold any additional reserves beyond what is required.
Answer the following statement true (T) or false (F)
A worker would be hurt least by inflation when the
A. worker is protected by a cost-of-living adjustment clause in an employment contract. B. worker anticipates inflation and increases savings at the bank. C. worker is protected by fixed annual increases in wages and benefits in an employment contract. D. government increases the level of social security retirement benefits to correct for the effects of expected inflation.