Table 14.3Monetary Aggregates of the U.S. Financial SystemItemAmountCash held by public$40 billionTransactions deposits$80 billionRequired reserves$20 billionExcess reserves$0 billionU.S. bonds held by public$125 billionAssume an original balance sheet: On the basis of the information in Table 14.3, the required reserve ratio is
A. 25 percent.
B. 15 percent.
C. 5 percent.
D. 20 percent.
Answer: A
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Who gains in a voluntary trade?
A. Both the buyer and the seller, but the seller usually gains more. B. Both the buyer and the seller. C. The buyer only. D. The seller only.
Suppose a bank has $160,000 in deposits and a required reserve ratio of 10 percent. Then required reserves are
A. $1,600,000. B. $160,000. C. $16,000. D. $1,600.
In which of the following cases is the after-tax real interest rate highest?
a. inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 20%. b. inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 25%. c. inflation is 4%, the pre-tax real interest rate is 2%, and the tax rate is 20%. d. inflation is 4%, the pre-tax real interest rate is 2%, and the tax rate is 25%.
Suppose you go to a high school and identify groups of students sitting at different lunch tables. To you it appears that everyone on the football team sits at one table, everyone who gets really high grades sits at another table, everyone who is in the drama club sits at another table, and so on. This outcome could be
A) the result of everyone preferring to sit at a table with dissimilar students, but not want to be at a table if he or she is in a 30 percent minority or less. B) because people naturally discriminate against (and make feel unwelcome) those people who are not like them. C) because the school authorities have instituted a one-week experimental plan to keep students segregated (at lunch) according to certain key interests. D) b and c E) all of the above