The primary function of reserve requirements is to serve as
A) a source of bank liquidity.
B) an instrument of monetary control.
C) a means of reducing bank profits.
D) a means of controlling the amount of currency in the banking system.
B
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The idea of comparative advantage implies that people or countries
A) should specialize in the production of goods. B) can gain from trading. C) can consume at a point outside their production possibilities frontier. D) all of the above.
When the price of oranges increases from $4 to $6 per bag, the quantity demanded of oranges decreases from 800 bags to 700 bags. The price elasticity of demand over this price range is equal to
A) 3. B) 3/7 or 0.4286. C) 1/3 or 0.3333. D) 1/4 or 0.25.
The external shock that hit Mexico and other Latin American countries in the early 1980s that caused the Lost Decade was a collapse in world oil prices
Indicate whether the statement is true or false
In the consumption function model, the 45-degree line represents where
A) the real disposable income is equal to zero. B) planned real saving is equal to zero. C) planned real consumption spending is equal to zero. D) planned real saving is greater than actual real savings.