What is a common source of leakage in the money creation process?
a. borrowers who deposit their loan money into a demand deposit account
b. banks that choose not lend all their excess reserves
c. banks that rapidly make new loans when additional funds are deposited
d. borrowers who choose to spend the full amount of their loans
b. banks that choose not lend all their excess reserves
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The higher the nominal interest rate, the
A) greater the opportunity cost of holding money. B) lower the quantity of money demanded. C) more the demand for money curve shifts leftward. D) Both answers A and B are correct.
Securities that banks sell and agree to repurchase are known as
A) federal funds. B) discount loans. C) repurchase agreements. D) NOW accounts.
In a competitive labor market, if a firm pays a worker less than that worker's VMP, then in the long run:
A. competing firms will hire the worker away. B. the supply of workers will fall. C. the firm will earn positive economic profits. D. the worker will have no incentive to work hard.
Which of the following does not influence the price elasticity of demand?
A. The length of time. B. The availability of substitutes. C. Costs of production. D. The price of the item relative to the consumer's budget.