Answer the following statements true (T) or false (F)
1. If banks had $10 million in legal reserves, $110 million in check able deposits, and a 10 percent reserve requirement, they would have to reduce check able deposits by $10 million or increase reserves by $1 million.
2. A decrease in reserve requirements immediately increases the money supply.
3. The total check able deposits a bank may have can be determined by dividing its reserves by the reserve requirement.
4. The most liquid measure of the U.S. money supply is M1.
5. Federal Reserve banks stand ready to convert dollars into gold upon demand.
1. TRUE
2. FALSE
3. TRUE
4. TRUE
5. FALSE
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An increase in the money wage rate leads to
A) a rightward shift of the aggregate supply curve. B) a downward movement along the aggregate supply curve. C) an upward movement along the aggregate supply curve. D) a leftward shift of the aggregate demand curve. E) a leftward shift of the aggregate supply curve.
Without price competition, there is no incentive for product differentiation.
Answer the following statement true (T) or false (F)
Economies of scale exist when
a. long-run average costs decline as output increases. b. long-run average costs are constant. c. long-run average costs increase as output increases. d. short-run average costs decline. e. short-run average costs increase.
A change in autonomous consumption causes a movement along the aggregate expenditure line, while a change in consumption that depends on income causes a shift of the aggregate expenditure line
a. True b. False