Which of the following statements is true?
A. Demand-pull inflation is caused by insufficient total spending.
B. Cost-push inflation is caused by an increase in resource costs.
C. If nominal interest rates remain the same and the inflation rate rises, real interest rates increase.
D. If real interest rates are positive, lenders incur losses.
Answer: B
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In an unregulated, competitive market, less than the efficient quantity of education is produced and consumed because
A) the decisions to produce and consume education are based on marginal private costs and marginal private benefits. B) the decisions to produce and consume education are based on marginal social costs and marginal social benefits. C) the decisions to produce and consume education are based on marginal private benefits and marginal social costs. D) marginal private costs are consistently greater than marginal private benefits.
If the Fed purchases $1 million in securities from the nonbank public, the monetary base will rise by $1 million
A) if the public holds the proceeds as currency. B) if the public deposits the proceeds as checkable deposits. C) if the public deposits the proceeds with the Treasury in a monetary base account. D) whether the public holds the proceeds as currency or deposits them as checkable deposits.
Which statement best describes the railroad?
(a) It is a good example of "technology transfer" (from England to the U.S.)—the first operating railroad was in England. (b) It is an American home product—the first operating railroad was in the U.S. (c) It was invented in England but first put into operation in the U.S. (d) It was invented in the U.S. but first put into operation in England.
Answer the following questions true (T) or false (F)
1. A cash withdrawal reduces deposits, reserves, and excess reserves in the banking system. 2. Banks hold 100% of their checking deposits as vault cash to ensure that bank runs do not occur. 3. A series of bank runs in a country should have no effect on M1 as money simply moves from checking deposits to currency.