How do banks create money?
What will be an ideal response?
Banks within the banking system create money by creating deposits, which are part of the nation's money. Banks create deposits by making loans because part or all of the loans they make will be deposited in another bank. For instance, a student given a loan may purchase books at the local bookstore. The bookstore will then deposit the proceeds into its bank as part of the bookstore's checking account. Thus the loan has created new deposits at the bookstore's bank.
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If Healthy Bars sells its snack bars in the United States for $3 a bar and for $2 (dollar equivalent) in Mexico, this is an example of ________.
A) two-part pricing B) third-degree price discrimination C) peak-load pricing D) second-degree price discrimination
Oligopolies would like to act like a
a. duopoly, but self-interest often drives them closer to the competitive outcome. b. competitive firm, but self-interest often drives them closer to the duopoly outcome. c. monopoly, but self-interest often drives them closer to the duopoly outcome. d. monopoly, but self-interest often drives them closer to the competitive outcome.
Environmental pollution is accounted for in:
a) GDP. b) PI. c) DI. d) none of these.
When estimating a short-run average variable cost function,
A. the intercept must be forced to equal zero. B. the cost data must be inflation-adjusted. C. at least one input must have been constant during the period in which the data were collected. D. both b and c E. all of the above