Assume a simplified banking system subject to a 10 percent required reserve ratio. If there is an initial increase in excess reserves of $90,000 and all possible loans are made, the money supply:
a. increases $90,000.
b. increases $900,000.
c. increases $990,000.
d. decreases $90,000.
b
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Refer to Figure 4.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, if the market quantity demanded is 5, the price must be
A) $3. B) $6. C) $9. D) $12.
Today, central banks __________ intervene to influence floating exchange rates
A) never B) seldom C) frequently D) are required
If firms in a monopolistically competitive industry experience short-run losses
A) some firms would like to exit the industry but find they cannot. B) firms increase prices further, until they make at least a normal return. C) firms increase advertising spending to increase demand, until they make at least a normal return. D) some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit.
Which market structure(s) is(are) considered highly concentrated?