Suppose a banking system has a required reserve ratio of 0.10. How much can the money supply increase in response to a $500 increase in excess reserves for the whole banking system?
A. $4,500.
B. $5,000.
C. $50.
D. $500.
Answer: B
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Market demand curves may slope downward even if some individual demand curves do not because
A. the law of demand requires that this is true. B. lower prices may bring more purchasers into the market. C. merchants try to sell more at lower prices. D. people believe expensive goods are better goods.
The funds paid to the government today for Social Security taxes are
A) invested to provide for the future benefits of the taxpayers. B) saved to ensure sufficient resources in the future to pay the benefits of workers today when they reach retirement age. C) used by the government to purchase goods and services that will enhance the future productivity of business in the country. D) used to pay the benefits of those who are currently retired.
Assume the production of a good causes a negative externality. In the market equilibrium, the marginal consumer values the good at
a. less than the social cost of producing it. b. less than the private cost of producing it. c. more than the social cost of producing it. d. more than the private cost of producing it.
The exceptional economic growth in East Asia during the last half of the twentieth century was in large part due to governments in this region ______.
a. limiting the number of births b. encouraging citizens to spend and consume rather than save c. ensuring good basic education for their citizens d. protecting citizens’ property rights