In the United States, the purchasing power of money is determined by:
a. the underlying precious metals that back each unit of currency.
b. the value of U.S. treasury bonds that back each unit of currency.
c. its acceptability.
d. Congress, which controls the money supply.
c
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If the actual reserve/deposit ratio equals 8% and the desired reserve/deposit ratio for this bank is 10%, the bank should:
A. send the extra reserves to the central bank. B. stop making loans. C. make more loans in order to earn interest. D. do nothing because this is a profitable situation.
If the minimum wage applies to one sector (the covered sector) but not another sector (the uncovered sector), an increase in the minimum wage in the covered sector is likely to result in which of the following?
A. less employment in the uncovered sector B. a lower wage in the covered sector C. workers willingly leaving the covered sector for the uncovered sector in search of higher wages D. a lower wage in the uncovered sector E. greater employment in the covered sector
Given the information that follows, how much are your family business's (a) accounting profits? (b) Economic profits? Sales: $700,000; total costs: $450,000; return you could have earned elsewhere: $20,000; wages you and your family members could have earned doing the same work for another firm: $120,000.
What will be an ideal response?
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower