In prosperous times, commercial banks are likely to hold very small amounts of excess reserves because:
A. the Fed forces commercial banks to increase the money supply during economic
expansions.
B. it is very costly to transfer funds between commercial banks and the central banks.
C. Federal Reserve Banks pay lower rates of interest on bank reserves than could be earned
by the commercial banks loaning out the reserves.
D. Federal Reserve Banks want to minimize their interest payments on such deposits.
C. Federal Reserve Banks pay lower rates of interest on bank reserves than could be earned
by the commercial banks loaning out the reserves
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The balanced-budget multiplier is equal to
A) 1. B) the reciprocal of the increase in government expenditures. C) the percentage increase in taxes. D) the percentage increase in government expenditures.
When a good is excludable:
A. one person's consumption prevents or decreases others' ability to consume it. B. it is possible for sellers to prevent its use by those who have not paid for it. C. consumers have a perception of scarcity of that good. D. the government has specific import policies limiting its supply.
Oligopolists almost always cooperate in making price and output decisions
a. True b. False Indicate whether the statement is true or false
The difference between nominal and real interest rates is that
A. real interest rates are what you get after having adjusted nominal rates for inflation. B. nominal interest rates are what borrowers pay and real interest rates are what lenders receive. C. real interest rates are almost always greater than nominal interest rates. D. nominal interest rates are what lenders receive and real interest rates are what borrowers pay.