When the Fed lowers the required reserve ratio, the banks' excess reserves ________ and the money supply ________.
A. increase; increases
B. decrease; decreases
C. remain constant; decreases
D. increase; remains constant
Answer: A
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If a firm wants to maximize profits, it should hire workers up to the point at which
A) total factor cost = total revenue. B) marginal factor cost = marginal revenue product. C) marginal utility = marginal cost. D) total social benefit = total social costs.
Economists have said that deregulation of the electric utility industry might lead to increased prices in the short run, but prices will fall in the long run. In this context:
a. the short run means the middle of next year. b. the short run means the period after all adjustments have been made, and the quantities of all resources have been varied as necessary. c. the long run means after all adjustments have been made, the quantities of all resources have been varied as necessary, and new market entrants begin producing electricity. d. the short run means the period after new firms begin producing electricity. e. the long run means approximately ten years.
If a perfectly competitive firm charges a price that is equal to its average total cost:
A. the firm is earning an economic profit equal to zero. B. the firm is earning an economic profit greater than zero. C. the firm is earning an economic profit less than zero. D. It is not possible to determine anything about the firm's profits.