If the reserve requirement is 10 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it
a. must increase required reserves by $50.
b. will initially see reserves increase by $500.
c. will be able to use this deposit to make new loans amounting to $450.
d. All of the above are correct.
d
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Under a fixed exchange rate system, if the government decides to devalue its currency, net exports will ________ and the IS curve will shift to the ________
A) increase; left B) increase; right C) decrease; left D) decrease; right
Assume the economy is in recession, the MPC is 0.80, and an increase of $200 billion in spending is needed in order to reach full employment. The target can be reached if government spending is increased by:
a. $20 billion. b. $200 billion. c. $80 billion. d. $40 billion.
You are part of a local community theater group. Its goal is to raise as much revenue as possible. Mary suggests raising ticket prices. Is she right?
a. yes if the demand for tickets is price inelastic b. no if the demand for tickets is price inelastic c. yes because raising prices always increases revenue d. no because raising prices reduces sales and revenue e. most likely because the demand curve for theater tickets is typically inelastic
If there is an improvement in technology that affects only Aggregate Supply and a nation's wealth falls due to sagging stock market, then:
a. Aggregate demand rises, but aggregate supply does not change. b. Aggregate demand falls, and aggregate supply rises. c. Aggregate demand and aggregate supply rise. d. Neither aggregate demand nor aggregate supply change. e. Aggregate demand rises, and aggregate supply falls.