A commercial bank has checkable-deposit liabilities of $500,000, reserves of $150,000, and a required reserve ratio of 20 percent. The amount by which a single commercial bank and the amount by which the banking system can increase loans are respectively:
A. $30,000 and $150,000
B. $50,000 and $250,000
C. $50,000 and $500,000
D. $100,000 and $500,000
B. $50,000 and $250,000
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Larger firms will often have lower minimum per-unit costs than smaller firms because
a. employee shirking is less of a problem. b. large-scale output allows greater specialization for both labor and machines in the production process. c. mass production techniques, with high setup and development costs, are appropriate only when a small output is planned. d. all of the above are correct.
Banks can hold deposits at the Federal Reserve. Balances in these accounts can be used by banks to meet their reserve requirements, but the Fed pays no interest on these deposits
a. True b. False Indicate whether the statement is true or false
Economists of the rational expectations school believe that if the economy is already producing its potential output, an expansionary monetary policy, if fully and correctly anticipated, will have no effect on output or employment
Indicate whether the statement is true or false
The multiplier means that the response to monetary policy is completed immediately.
Answer the following statement true (T) or false (F)