Checking account deposits are classified as money because:
A. they can be readily used to make purchases and pay debts.
B. they earn interest income for the depositor.
C. banks hold currency equal to their outstanding deposits.
D. they are ultimately obligations of the Treasury.
Answer: A
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Automobile manufacturers produce a range of automobiles such as sports utility vehicles, luxury sedans, pickup trucks, and compact cars. What fundamental economic question are they addressing by making this range of products?
A) Who to produce automobiles for? B) How to produce goods that consumers want? C) What to produce? D) Why produce a variety of automobiles?
In the banking system today, the reserves banks hold against their deposit liabilities must take one of two forms. They are
A) vault cash and deposits at the Fed. B) vault cash and checkable deposits. C) currency in circulation and checkable deposits. D) gold and vault cash.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.
Suppose the market for grass seed is expressed as Demand: QD = 100 - 2p Supply: QS = 3p Price elasticity of supply is constant at 1. If the supply curve is changed to Q = 8p, price elasticity of supply is still constant at 1. Yet, with the new supply curve, consumers pay a larger share of a specific tax. Why?
What will be an ideal response?