People hold $400 million of bank deposits but no currency. Banks have made $380 million dollars of loans and only hold enough reserves to satisfy reserve requirements. Because of uncertainty, banks choose to hold $10 million more in reserves. The Fed takes no action. What happens to bank loans?
a. they fall $220 million
b. they fall $200 million
c. they rise $200 million
d. they rise $220 million
b
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Refer to the above figure. Line ABCD is a(n)
A) discretionary-policy curve. B) Phillips curve. C) natural rate of unemployment curve. D) aggregate demand curve.
Under the total revenue and total cost approach to profit maximization,
a. firms equate total cost and total revenue in order to maximize profit b. the profit-maximizing output level is equivalent to the total revenue-maximizing output level c. when total costs are minimized, profits are maximized d. firms choose the output level where TR - TC is greatest e. total cost must always exceed total revenue in the long run
The wage paid to labor should increase when:
a. the capital/labor ratio increases. b. the capital/labor ratio decreases. c. a country's labor force increases. d. a country's capital stock decreases.
Fixed investment is
A. when a firm accumulates profits. B. dissavings. C. an expenditure by firms on new machines that are expected to produce income in the future. D. when a firm adds to its inventories of goods.