A single bank is severely limited in its ability to create money because:
a. the FDIC will not permit it to create money unless the Resolution Trust Corporation guarantees the loans.
b. loan recipients usually take the proceeds of the loan in cash
c. the funds loaned probably will be deposited in another bank.
d. recent federal legislation prohibits banks from creating money except to finance international trade.
c
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Impact of Exchange Rate Fluctuations
A decrease in quantity demanded of a good is caused by
A) a decrease in income. B) a decrease in the price of a substitute. C) an increase in the price of the good. D) a change of tastes.
Suppose that the owner of a local ice cream store, knowing that demand for ice cream is higher when the weather is warmer, always charges a price in cents for a scoop of ice cream that is equal to two times the current outdoor temperature, measured in Fahrenheit (so that if it is 90 degrees outside, the ice cream is $1.80 per scoop). This type of behavior is ________.
A. known as meeting demand B. exactly the type of behavior that Keynes believed most firms exhibit C. inconsistent with the key assumption upon which the basic Keynesian model is built D. free from menu costs
In which of the following market structures do you find barriers to entry?
A. a monopoly B. a perfectly competitive market C. a monopolistic competition D. Both a monopoly and a perfectly competitive market are correct