When Considering a Person's Standard of Living,data on the Income

question 164

Multiple Choice

When considering a person's standard of living,data on the income distribution and the poverty rate may provide an incomplete picture because the poor may

• A) receive in-kind transfers.
• B) be lending in order to smooth their income over their life cycle.
• C) be saving in order to smooth their income due to a drop in transitory income.
• D) under-report their income.

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Definitions:

Money Supply

The collective volume of monetary assets within an economy at a certain point, including cash, coins, and balances in checking and savings accounts.

Fractional-reserve Banking

A banking system where banks hold only a fraction of deposits as reserves and lend out the remainder, thereby creating additional money supply.

Bank Runs

Situations where a large number of bank customers withdraw their deposits simultaneously due to fears that the bank will become insolvent.

Reserve Requirement Ratio

The reserve requirement ratio is the fraction of deposits that banks are required to keep on hand as reserves, determined by the central bank.