What limits a bank's ability to extend loans?
An individual bank can safely lend an amount equal to its excess reserves, which are reserves in excess of legal reserve requirements.
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Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Process(smoke/day) A(10 tons/day) B(8 tons/day) C(6 tons/day) D(4 ton/day) E(2 tons/day) Cost to Acme ($/day) $750$800$1,000$1,400$2,000 Cost to FirmCo ($/day) $500$750$1,200$2,200 $4,000Suppose the firms are both currently using process A. If the government requires each firm to reduce pollution by 20%, then the total cost to society of this policy will be ________ per day.
A. $1,550 B. $2,350 C. $950 D. $300
In the long run, more costs become fixed
a. True b. False Indicate whether the statement is true or false
If you as a lender want an increase in purchasing power of 4 percent from making a loan and you set the nominal interest rate at 9 percent, then your
a. real rate of interest is 13 percent. b. expected rate of inflation is 5 percent. c. expected rate of inflation is 13 percent. d. real rate of interest is 36 percent.
Which of the following are human capital and physical capital, respectively?
a. for a brick layer: her bricks and her tools b. for a gas station: the pumps and the cash register c. for a restaurant: the chefs' knowledge about preparing food and the equipment in the kitchen d. for a medical office: the building and the doctors' knowledge of medicine