In terms of accepting deposits and making loans, explain the differences between commercial banks and a central bank
What will be an ideal response?
Commercial banks accept deposits from and make loans to individuals and businesses. Central banks accept deposits from and make loans to commercial banks and the federal government.
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Which of the following is an example of a product that is nonexcludable and nonrival?
A) a motorcycle B) the court system C) Western lowland gorillas D) a NASCAR event
Reducing prices below cost in order to eliminate competitors (with the intention of later raising prices to recoup all losses) is
A) an empirical impossibility in a free society. B) called induced competition. C) called predatory price cutting. D) increasingly common in the American economy.
An increase in the capital stock will:
A. shift the production function downward. B. shift the production function upward. C. flatten the production function. D. steepen the production function.
By saying that the equation of exchange is an accounting identity, we mean that
A. it explains the effect of questionable accounting practices on macroeconomic performance. B. it identifies the key national income accounts. C. it is always true. D. it is useful for accountants, but not for economists.