Which if the following is the best example of derived demand?
A. The demand for movie theater ushers increases when more consumers choose to go to movie theaters.
B. More peanut butter is demanded as the price of strawberry jam falls.
C. When the price of Honda Accords increased, the demand for Nissan Altimas went up.
D. Janice got a Samsung Galaxy Tab for her birthday, and now her best friend Tamika wants one for her birthday.
Answer: A
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Lenders generally want borrowers to agree to invest prudently, yet once a loan is made borrowers may use the funds in a highly risky fashion. This leads to the problem of
A) deposit insurance. B) investor selection. C) critical mass. D) moral hazard.
A bank creates money by
A) lending its excess reserves. B) purchasing currency from the Federal Reserve. C) buying bonds from the Federal Reserve. D) printing more checks.