Banks are able to create money only when
a. interest rates are above 2%.
b. the Fed sells U.S. government bonds.
c. the reserve ratio is 100%.
d. only a fraction of deposits are held in reserve.
d
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Consumption smoothing refers to
A) the tendency of all consumers to choose the same amount of current consumption. B) the tendency of consumers to seek a consumption path over time that is smoother than income. C) the tendency of consumers to seek an income path over time that is smoother than consumption. D) consumer's concerns about going heavily into debt.
A friend says, "I really, really need a new car." As an economist, you're thinking
A) Right! Everyone needs a new car. B) This is an example of how objectively undefinable needs are. Many would argue that this friend could get along just fine with a reliable used car. C) If this friend says she needs a new car, then we must all agree that a new car is a need and not just a want. D) that a new car can only be considered a need if at least 51% of the public agrees.