With a marginal propensity to save of .4, the marginal propensity to consume will be:
A. 1.0 minus .4.
B. .4 minus 1.0.
C. the reciprocal of the MPS.
D. .4.
A. 1.0 minus .4.
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Cash held by a bank in its vault is a part of the bank's
A. liabilities. B. reserves. C. net worth. D. money supply.
What is potential GDP and what is the relationship between actual and potential real GDP?
What will be an ideal response?
An increase in interest rates will cause investment to
A) increase. B) decrease. C) not change. D) move erratically, depending on the interest rate effect on saving.
Commercial banks increased their involvement in mortgages over the years due to:
A. the ability to securitize mortgages which made them more liquid. B. the increase in commercial loans demanded due to the development of the commercial paper market. C. the reduced risk of borrowers' defaulting on mortgage loans. D. the demands of regulators.