Banks are able to create money:
a) with a printing press.
b) by issuing loans.
c) by selling bonds.
d) by charging interest.
Answer: b) by issuing loans.
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The product life cycle theory of comparative advantage predicts that a new product will be first produced and exported by:
a. the nation that first demanded the new product. b. the first firm to successfully copy the technology. c. the nation in which it was invented. d. the countries with the most stable economies and the fewest restrictions on foreign trade. e. the company with the most extensive network of international distributors for the product.
Supporters of raising the minimum wage argue that minimum-wage laws are
a. a tax-free way to help the working poor. Businesses bear the burden of paying higher wages, not the government. b. better than the Earned Income Tax Credit (EITC) in targeting the working poor. The EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. c. better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. d. a way to increase employment of those likely to earn the minimum wage.