A hypothetical bank accepts cash deposits from all its clients. The bank promises that all the funds deposited with it are absolutely secure and available to the depositors whenever they need them. In the given scenario, which of the following is true?
a. The bank holds 100 percent reserves with itself.
b. The bank holds 50 percent reserves with itself.
c. The bank makes loans at steep
interest rates.
d. The bank invests only in securities.
a
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Spending on durable goods, nondurable goods, and services is included in:
A. investment. B. net exports. C. consumption expenditures. D. government purchases.
Surveys show that a small increase in the price of organic potatoes will cause most people to switch to other alternatives such as packaged mashed potatoes. This finding suggests that the demand curve for organic potatoes is
a. relatively steep. b. relatively flat. c. upward sloping. d. vertical.
As the number of firms in an industry increases, the residual demand curve becomes
A) more elastic. B) less elastic. C) larger. D) vertical.
If an externality is present in a market, economic efficiency may be enhanced by
a. increased competition. b. weakening property rights. c. better informed market participants. d. government intervention.