An important effect of fractional reserve banking is that bankers have
A. little control over total reserves.
B. total control over the amount of lending in the economy.
C. no control over the amount of reserves in the banking system.
D. some discretion over the money supply.
Answer: D
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With total fixed cost of $400, a firm incurs an average total cost of $3 and average variable cost of $2.50. The amount of output produced by the firm must be
A. 800 units. B. 1,600 units. C. 400 units. D. 200 units.
Households are buyers in factor markets and sellers in goods markets
Indicate whether the statement is true or false
If the economy is experiencing an inflationary gap and the government wants to accelerate the adjustment to the long-run equilibrium, it should
A) reduce aggregate demand by cutting government spending or raising taxes. B) reduce aggregate demand by increasing government spending or cutting taxes. C) increase aggregate supply by cutting government spending or raising taxes. D) increase aggregate supply by increasing government spending or lowering taxes.
In an idealized laissez-faire world, the distribution of products is
a. the most efficient. b. the most fair. c. purely random. d. unpredictable.