Which is the most comprehensive description of the supply of money in the Irish economy?
(a) Euro notes and coins issued by the Irish Central Bank;
(b) Money created by the commercial banks;
(c) Euro notes/coins and bank deposits;
(d) All items of legal tender plus Euro in circulation.
Answer: (d) All items of legal tender plus Euro in circulation.
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Answer the following statement(s) true (T) or false (F)
1. Speculators will sell futures contracts when they believe future demand will be lower than suppliers expect. 2. Diversification tends to raise the standard deviation of a portfolio. 3. Risk-averse investors choose to hold only two assets: a risk-free asset and a market portfolio 4. When faced with two portfolios that offer the same expected return, a risk-averse investor prefers the one with the higher standard deviation. 5. There is only one possible market portfolio-the portfolio consisting of all the risky assets in the economy.
An increase in the price of corn will lead to
A) an upward (and leftward) movement along the demand curve for corn. B) a leftward shift in the demand curve for corn. C) a rightward shift in the supply curve for corn. D) an increase in the quantity of corn consumed.
Government imposed price controls often lead to
A) illegal trades of the good. B) the most efficient use of resources. C) the equilibrium solution in terms of price and quantity. D) maximization of profits.
Assume a simple macroeconomic model. When inventories rise unexpectedly,
A. income is above its equilibrium value. B. income will rise until it reaches its equilibrium value. C. total spending is higher than total output. D. total output is less than spending.