The ability of commercial banks to create money depends on the
Reserve ratio
Liquidity ratio
Interest rate
Capital base
Correct answer is A
No explanation has been provided for this answer.
In the circular flow of income, an increase in savings causes
An increase in imports
A decrease in the income stream
An increase in household consumption
A decrease in exports
Correct answer is B
An increase in savings will lead to a reduction in the stream of income available for consumption in the household.
Double counting is a problem in computing national income when using the
Expenditure method
Income method
Output method
Value-added method
Correct answer is D
The value-added method calculates national income by adding value to a product at every stage of its production.
In measuring the National Income, the value of only final goods and services is to be included. However, the problem of double counting arises when value of intermediate goods is also included along with the value of final goods.
In the long run, one of the characteristics of monopolistic competitive firms is that they
Make abnormal profits
Suffer losses
Make normal profits
Collude with each other
Correct answer is B
In the long run, monopolistic firms can freely enter and exits the market, firms can make decisions independently; there is some degree of market power; and buyers and sellers have imperfect information.
The firms produce at a level where marginal cost and marginal revenue are equal. Companies in monopolistic competition will earn zero economic profit in the long run.
In developing countries, it is easier to obtain accurate national income estimates through the
GNP
GDP
NDP
NNP
Correct answer is B
No explanation has been provided for this answer.