When the price of a good falls, consumers buy more of the good because it is cheaper relative to competing goods. This statement describes the:
A. consumer equilibrium effect.
B. price effect.
C. income effect.
D. substitution effect.
Answer: D
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If an economy's population grows at 3 percent and GDP grows at 4 percent, then:
a. per capita real GDP is declining. b. the economy's standard of living is decreasing. c. per capita real GDP is negative. d. per capita real GDP is growing. e. the economy is experiencing unemployment.
In the U.S. over the last 50 years:
A. imports have grown and exports have fallen. B. both imports and exports have grown dramatically. C. both imports and exports have fallen dramatically. D. the percent of GDP that represents imports and exports has remained fairly steady.
Which of the following market structures is characterized by a single firm and huge barriers to entry?
a. Monopolistic competition b. Oligopoly c. Monopoly d. Monopsony e. Perfect competition
Explain how banks create loans and how this process is impacted by the reserve requirement and excess reserves. Then, create a scenario that demonstrates how banks create money when they issue loans, being sure to include an initial deposit amount, a reserve requirement ratio, an excess reserve amount, and how much money can be created from a single transaction.
What will be an ideal response?