The textbook asserts that banks create money themselves. How?
A) Banks have their own printing presses, which is permitted by the Fed.
B) Banks are allowed to reach well into their required reserves as long as they can demonstrate that it would be profitable to do so.
C) Banks, when lending out their excess reserves, unleash a process that can increase the money supply through the deposit expansion multiplier.
D) For all of the above reasons.
C
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Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million dollars worth of supplies from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?
a. $12 million b. $11 million c. $10 million d. $9 million
Marta lends money at a fixed interest rate and then inflation turns out to be higher than she had expected it to be. The real interest rate she earns is
a. higher than she had expected, and the real value of the loan is higher than she had expected. b. higher than she had expected, and the real value of the loan is lower than she had expected. c. lower than she had expected, and the real value of the loan is higher than she had expected. d. lower then she had expected, and the real value of the loan is lower than she had expected.
Which statement is true?
A. Both unemployment compensation and personal savings are automatic stabilizers. B. Neither unemployment compensation nor personal savings are automatic stabilizers. C. Only unemployment compensation is an automatic stabilizer. D. Only personal savings is an automatic stabilizer.
The costs that arise from the way inflation makes money a less reliable unit of measurement are known as:
What will be an ideal response?