If the fractional reserve system did not exist,
A. the banking system could not create money.
B. there would be no effect on the ability of the banking system to create money.
C. banks would loan out its required reserves.
D. banks would be highly susceptible to bank runs.
Answer: A
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The money demand curve will shift to the left if:
A. the price level increases. B. the nominal interest rate increases. C. the nominal interest rate decreases. D. real income decreases.
When using pollution charges to improve efficiency in a market with an external cost, regulators attempt to set the pollution charge equal to the
A) marginal social cost of production. B) marginal external cost of production. C) marginal private cost of production. D) marginal private benefit of consumption. E) marginal external benefit minus the marginal external cost.
A positive relationship exists between two variables if
A) one variable has "positively" no effect on the other variable. B) a reduction in one variable is associated with an increase in the other variable. C) a reduction in one variable is associated with a decrease in the other variable. D) both variables are inflation-distorted.
During a recession, higher welfare outlays:
a. increase the size of the budget deficit even if the government does not undertake discretionary fiscal policy. b. decrease the size of the budget deficit regardless of the government's discretionary fiscal policy c. increase the size of the budget deficit only if the government undertakes discretionary fiscal policy. d. decrease the size of the budget deficit only if the government undertakes discretionary fiscal policy. e. have the same effect on the budget deficit as they do in times of expansion.