A bank has excess reserves of $1,000 and demand deposit liabilities of $80,000 when the reserve requirement is 25 percent. If the reserve requirement is lowered to 20 percent, the bank's excess reserves will be
A) $1,000.
B) $5,000.
C) $8,000.
D) $9,000.
B
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As a general rule, an increase in the capital available to a society
A. reduces the slope of the production possibilities frontier, making it shallower. B. increases the slope of the production possibilities frontier, making it steeper. C. shifts the production possibilities frontier outward, away from the origin. D. shifts the production possibilities frontier inward, toward the origin. E. makes the production possibilities frontier more bowed out.
List five ways that the creators of the U.S. Federal Reserve System set up the system to be independent from the federal government
What will be an ideal response?
A consumer's utility function is given by: U(x,y) = 10xy
Currently, the prices of goods x and y are $3 and $5, respectively, and the consumer's income is $150. a. Find the MRS for this consumer for any given bundle (x,y). b. Find the optimal consumption bundle for this consumer. c. Suppose the price of good x doubles. How much income is required so that the consumer is able to purchase the original consumption bundle (if you were unable to solve d., then take a guess at what the optimal bundle is before solving this) d. Now that the price of good x has doubled, how much income is needed for the consumer to reach the original level of utility? Is this more or less that what you found in e.?
The multiplier effect refers to the fact that a change in spending (aggregate demand) will
a. increase the money supply. b. cause prices to rise by some multiple of the initial increase in spending. c. cause nominal output to rise by some multiple of the initial increase in spending. d. reduce prices by some multiple of the increase in spending.