If fractional reserve banking exists, then:
A. the money multiplier is equal to 1.
B. banks need only keep a portion of each deposit on hand.
C. lending would be curtailed to nearly zero.
D. money cannot be created in the economy through banks.
Answer: B
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Real GDP definitely increases if
A) the AS curve shifts leftward and the AD curve does not shift. B) the AD curve shifts leftward and the AS curve shifts rightward. C) both the AD curve and the AS curve shift rightward. D) both the AD curve and AS curve shift leftward. E) potential GDP decreases so that real GDP exceeds potential GDP.
Refer to Scenario 12.3. What is the monopoly price of this new drink?
A) 0 B) $3 C) $13.50 D) $16.50 E) $27
The marginal utility gained from the consumption of successive units of a typical good:
A. tends to decrease. B. tends to increase. C. may increase or decrease depending on the cost of the good. D. tends to stay the same.
When government spending is equal to the tax revenues during a specific time period, this is known as a
A. government budget deficit. B. government budget surplus. C. balanced budget. D. public debt.