The required reserve rate set by the Fed is ten percent of all checkable deposits. A bank sells $1 million of U.S. Treasury securities it owns to the Fed. Describe what this transaction does to the bank's total reserves, its required reserves and its excess reserves.
What will be an ideal response?
The sale of the securities will immediately increase the bank's reserves by the value of the sale, which in this case is $1 million. Since the bank's liabilities have not changed, the required reserves for the bank have not changed. As a result, the $1 million increase in reserves is all excess reserves.
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The direct trade of goods and services for other goods and services is called:
A. financial intermediation. B. using a medium of exchange. C. diversification. D. barter.
If you must determine the long-run equilibrium output of a perfectly competitive firm and you are permitted to see only one curve, which of the following curves is most helpful?
a. demand b. marginal cost c. average cost d. average fixed cost
Which of the following is true of resources?
A. Resources are outputs from the production of goods and services. B. A $1,000 investment is an example of a capital resource. C. Entrepreneurship organizes resources to produce goods and services. D. Land resources do not include water.
When hiring additional workers, a firm operating in a perfectly competitive labor market will
A) have to offer higher wages to hire additional workers, but the old workers do not get the higher wage. B) have to offer higher wages to hire additional workers, and the old workers will also receive the new, higher wage. C) be able to hire additional workers without offering higher wages. D) be able to hire additional workers at lower wages because the new workers have been unemployed.