If checkable deposits rise, it follows that the
A) required reserve ratio will fall.
B) dollar amount of reserves will rise.
C) dollar amount of vault cash will rise.
D) required reserve ratio will rise.
E) none of the above
B
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An increase in interest rates might ________ saving because more can be earned in interest income
A) encourage B) discourage C) disallow D) invalidate
Your firm is evaluating a potential investment in new machinery, but the manager in charge of the project uses an opportunity cost of capital that is too large. How does this error affect the projected net present value of the firm's investment?
A) NPV is overstated B) NPV is understated C) NPV is unaffected D) NPV changes from positive to negative
Describe the relationship between average variable cost and average total cost. How are the general shapes of the AVC and ATC curves related?
A price change will have no effect on total revenue if demand is
A. Perfectly elastic.
B. Unitary elastic.
C. Inelastic.
D. Elastic.