What would happen if banks decided to stop lending altogether and instead held on to enormous amounts of cash?
A. The tools of monetary policy would become less effective in response to high inflation.
B. This would not impact the effectiveness of monetary policy.
C. The tools of monetary policy would become more effective in response to a recession.
D. The tools of monetary policy would become less effective in response to a recession.
Ans: D. The tools of monetary policy would become less effective in response to a recession.
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Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand is
A) zero. B) positive. C) negative. D) either positive or negative.
The Wall Street Journal publishes an exchange rate of US$/C$ = 0.714, where US$ represents the U.S. dollar and C$ represents the Canadian dollar. What does this mean?
a. The Canadian dollar price of one U.S. dollar is US$0.714. b. The Canadian dollar price of one U.S. dollar is C$0.714. c. The U.S. dollar price of one Canadian dollar is C$1.40. d. The U.S. dollar price of one Canadian dollar is US$1.40 e. The U.S. dollar price of one Canadian dollar is US$0.714.