Imagine that Wingate National is a new bank, and that the legal reserve requirement is 10 percent. If it accepts a $1,000 cash deposit, then, excluding the $1,000 initial deposit, the banking system can increase the money supply by
a. $900
b. $910
c. $1,000
d. $9,000
e. $10,000
D
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The theory that explains the shift of color TV sets production from the United States to Japan and Taiwan is called the _____ theory
a. productivity difference b. factor abundance c. product life cycle d. preference e. human skills
A $10 billion reduction in taxes increases Real GDP by $60 billion. Assuming a constant price level, what does the tax multiplier equal?
A) 70 B) 6 C) 50 D) 0.17 E) 0.83
Exhibit 2-7 Production possibilities curve
For the economy shown in Exhibit 2-7 to operate at point C, it must:
A. be willing to lower the price of grain. B. use its given resources more efficiently than it would at point A. C. experience resource unemployment. D. experience an increase in its resources and/or an improvement in its technology.
Which type of resource will improve through more education and training by workers?
A. physical capital B. human capital C. natural resources D. money