If your bank faces a 20 percent required reserve ratio and receives a cash deposit of $4,000 into a checkable deposit account, the maximum total amount of money possible after the banking system makes all loans is:
A. $3,200.
B. $4,000.
C. $16,000.
D. $20,000.
Answer: D
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Answer the following statement(s) true (T) or false (F)
1. A competitive firm will exit an industry in the long run if the market price falls below the firm's break-even price. 2. For a competitive firm with a downward sloping marginal cost curve, the supply curve and the marginal cost curve look exactly the same 3. There is no reason for a competitive firm to stay in business if it is making zero economic profit. 4. A decrease in firms’ variable costs will cause the output of the market to decrease. 5. A technological advance that reduces firms’ variable costs will lead to higher profits in the long run of a perfectly competitive industry.
The federal funds rate is the interest rate that ________ charge(s) ________.
A. banks; their best corporate customers B. the Fed; commercial banks C. banks; on federal student loans D. banks; other banks
A change in any of the following factors EXCEPT ________ shifts the aggregate demand curve
A) expectations about the future B) the money wage rate C) monetary and fiscal policy D) foreign income E) the foreign exchange rate
Price floors are illegal in the United States
Indicate whether the statement is true or false