Two reasons savers keep deposits at banks are to:
A. lower interest rates and to increase the money supply.
B. equalize loan supply and demand and to earn interest.
C. earn a return on their savings and to facilitate making payments.
D. secure mortgages and to purchase stocks.
Answer: C
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A tax cut initially
A) increases consumption expenditure by an amount greater than the tax cut. B) increases consumption expenditure by an amount equal to the tax cut. C) increases consumption expenditure by an amount that is less than the value of the tax cut. D) has no effect on consumption expenditure. E) reduces consumption expenditure by an amount that is less than the value of the tax cut.
Automatic stabilizers tend to stabilize the level of economic activity because they
A. Are changed quickly by Congress. B. Increase the size of the multiplier. C. Control the rate of change in prices. D. Increase spending during recessions and reduce spending during inflationary periods.
Clipping coins created inflation because:
A. it decreased the money supply. B. it decreased the stock of capital goods. C. it increased the stock of capital goods. D. it increased the money supply.
________ occurs when price- and quantity-fixing agreements among producers are implicit.
A. A price-leadership model B. A Cournot model C. A monopoly D. Tacit collusion