If a bank has $200,000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $80,000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is
A) $50,000.
B) $40,000.
C) $30,000.
D) $25,000.
A
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Marginal costs and marginal benefits
A) do not include sunk costs. B) include sunk costs. C) are really just fixed costs. D) are not useful in decision making.
A supply-side economist would recommend a cut in marginal tax rates on capital gains and on investment expenditures
A. When the economy is in a recession. B. if government spending is cut by an equal amount. C. if it is judged that the resulting deficit will not crowd out very much investment. D. regardless of the state of the economy or other policies.
Morgan lives in San Francisco and likes to dine out. Morgan has noticed that prices at restaurants near popular tourist destinations in the city tend to be higher than at restaurants of the same quality in other neighborhoods. One reason for this is that:
A. tourists don't worry about money while on vacation. B. search costs are higher for people who are unfamiliar with the area. C. residents don't like to eat in restaurants frequented by tourists. D. restaurant meals are a small fraction of the total cost of a vacation.
The oversimplified money multiplier formula, when the required reserve ratio is m, is
A. change in money supply = change in reserves × m. B. change in money supply = (1 / m) / change in reserves. C. change in money supply = (1 / m) × change in reserves. D. change in money supply = m / change in reserves.