Suppose that the interest rate is so low that banks currently refuse to make loans. An increase in the supply of high-powered money will
A) have no effect on the money supply if all the new high-powered money ends up as bank reserves.
B) have no effect on the money supply if all the new high-powered money ends up as cash in the hands of the nonbank public.
C) raise the money supply depending on banks reserve-holding ratio.
D) All of the above are correct.
A
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The distinguishing feature of a well-functioning financial market is the
A) continual increase in the liquidity of most assets. B) continual reduction in the riskiness of most assets. C) increased ease of converting common stocks into bonds. D) incorporation of available information into asset prices.
The winner of a sealed-bid first-price auction is the participant who bid the ________ and pays the amount of the ________.
A) highest; second-highest bid B) highest; bid C) second-highest; bid D) second-highest; second-highest bid
Which of the following is a positive externality of consumption?
a. inoculations against a disease reduce the likelihood of transmitting it to others b. phosphates from laundry detergents c. litter from fast-food containers d. ozone depletion from the production of fast-food containers e. the greenhouse effect
In the Keynesian income-expenditure graph, total savings at each level of national income is indicated by
a. the vertical distance between the consumption function and the 45-degree line. b. the slope of the consumption function. c. the horizontal distance between the consumption function and the 45-degree line. d. the slope of the saving function.