Banks are required to keep a minimum level of reserves on hand. The intent of this regulation is
a. monetary control rather than bank safety.
b. bank safety in case of bank runs.
c. maintenance of bank profits.
d. limiting the level of bank profits.
a
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When a bank issues a checkable deposit and loans the funds out to a business, it has transformed
A) a financial asset for a saver into a liability for a borrower. B) a financial liability for a saver into a financial asset for a borrower. C) a short-term liability to a borrower into a long-term asset to a saver. D) one liability into another liability.
Answer the following statements true (T) or false (F)
1. Predatory pricing, such as the high price of pharmaceuticals, is legally protected under patent law. 2. If a monopolist chooses a low level of output, it can charge only a relatively low price. 3. In the real world, a monopolist can use marginal revenue and cost information to determine the profit-making combination of quantity and price because information on total revenues and costs is often not available. 4. Allocative efficiency refers to producing the optimal quantity of some output, the quantity where the marginal benefit to society of one more unit just equals the marginal cost. 5. One type of an imperfectly competitive market is called monopolistic competition. Monopolistically competitive markets feature a large number of competing firms, but the products that they sell are not identical.
Can economic profit ever exceed accounting profit?
Everything else equal, if the ratio of bank assets to bank capital decreases, the bank's return on equity should:
A. cannot be determined from the information provided. B. remain constant. C. increase. D. decrease.