The number of dollars that the commercial banking system can add to the money supply for each dollar of new reserves created by the Fed
A) cannot legally be greater than 8 nor less than 2.
B) is governed largely by reserve requirements and the form in which the public chooses to hold money.
C) is less than one because a portion of new reserves must be retained in bank vaults or on deposit with the Fed.
D) would increase if the public decided to transfer the amounts currently in commercial bank savings accounts into checking accounts.
B
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One of the following is not a characteristic of perfect competition. Which is it?
A. Firms advertise to increase their market share. B. Profits are low in the long run. C. Consumers pay little attention to brand names. D. Firms pay no attention to their competitors’ output levels.
A legal minimum on the price at which a good can be sold is called a price
A. subsidy. B. floor. C. support. D. ceiling.
If the four-firm concentration ratio in an industry increases, the industry
A. must have become more competitive. B. must have become a monopoly. C. must have become less competitive, although not necessarily a monopoly. D. may or may not have become less competitive.
If money was not used as a medium of exchange,
A) the transaction costs of exchange would be lower. B) our standard of living would probably improve. C) economic efficiency would increase. D) the gains from trade would be severely limited.