How will the purchase of $100 million of government securities by the Federal Reserve change bank reserves and total checking account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and firms
do not change the amount of currency they hold, and that the required reserve ratio is 20 percent.
What will be an ideal response?
Bank reserves will increase by $100 million when the seller of the bond deposits the $100 million in its checking account. Total checking account deposits in the banking system as a whole will increase by $500 million—the $100 million increase in reserves times the simple deposit multiplier of 5.
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The government can facilitate the transfer of unskilled workers to high-skilled jobs by
A) increasing tariffs to speed the development of jobs requiring skilled labor. B) laying off skilled workers to provide jobs for unskilled workers. C) providing assistance for education and training for unskilled workers. D) increasing tariffs to help unskilled workers.
Quidco International engaged in a leveraged buyout when it borrowed 10% of the funds it needed to purchase Remmick International
Indicate whether the statement is true or false
When a customer deposits $100 into a checking account, the effect is to
a. increase the bank's liabilities. b. decrease the bank's liabilities. c. increase the bank's assets. d. decrease the bank's assets. e. increase both the bank's liabilities and its assets.
If a pure monopolist can price discriminate by separating buyers into two or more groups:
A. the marginal revenue curve and the total revenue curve will now coincide. B. the marginal revenue curve will now shift to a position above the demand curve. C. the firm will face multiple marginal revenue curves. D. marginal revenue will become less at each level of output than it would be without price discrimination.