Imagine a Crude Banking System Based on a Reserve of 100

question 3

Multiple Choice

Imagine a crude banking system based on a reserve of 100 gold coins,with circulating paper deposit claims on 500 gold coins.This situation is sustainable if,among other things,merchants ________ accept paper claims on gold as payment for their goods,and gold coins withdrawn from the banking system are ________ the system.

• A)will,returned to
• B)will,kept out of
• C)will not,returned to
• D)will not,kept out of

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Definitions:

Fixed Costs

Expenses that do not vary with production volume or service levels, such as rent, salaries, and insurance premiums.

Price Sensitivity

The degree to which the demand for a product or service is affected by changes in its price.

Unconditional Warranty

A guarantee provided on a product that offers coverage or repair without any conditions or limitations.

Break-even Quantity

is the volume of sales a business must achieve to cover all its costs, without making a profit or a loss.