A bank creates money when it
a. gets new demand deposits that the depositor formerly held as cash
b. has a loan paid off, which creates excess reserves for the bank
c. makes a loan from its excess reserves
d. holds back excess reserves because of an increase in the legal reserve requirement
e. gets more excess reserves because of a decrease in the legal reserve requirement
C
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In a committee, any outcome preferred by any member can win
a. True b. False
Refer to Scenario 16.1. Initially Sam and Sally are allocated 10 cheese doodles and 10 pretzels each. Which of the following statements are TRUE?
A) The initial allocation is Pareto optimal as it is equitable. B) The initial allocation is Pareto optimal as Sally and Sam have equal amounts of both goods. C) The allocation is not Pareto optimal. An allocation that gave Sam all of the cheese doodles and Sally all of the pretzels would make both of them better off. D) The allocation is not Pareto optimal. An allocation that gave Sam four of the cheese doodles and sixteen of the pretzels (leaving Sally the rest) would make both of them better off.