When a customer deposits 100 into a checking account, it:
a. increases the bank's liabilities only.
b. decreases the bank's liabilities only.
c. increases the bank's assets only.
d. decreases both the bank's liabilities and its assets.
e. increases both the bank's liabilities and its assets.
Question 2
An increase in the price level will:
a. make the consumption function flatter.
b. make the consumption function steeper.
c. increase consumption because wages will increase.
d. decrease consumption because falling interest rates make it cheaper to borrow.
e. decrease consumption because the value of net wealth will decrease.
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