Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting downward
C. Aggregate demand shifting rightward
D. Aggregate demand shifting leftward
Answer: B
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Banks in the Diamond-Dybvig model can offer depositors increased liquidity because
A) both individual depositors' liquidity needs and average depositor liquidity needs are predictable. B) while individual depositors' liquidity needs are unpredictable, average depositor liquidity needs are predictable. C) while individual depositors' liquidity needs are predictable, average depositor liquidity needs are unpredictable. D) neither individual depositors' liquidity needs nor average depositor liquidity needs are predictable.
Browsing on the Job The Dunder-Miflin Paper Company has been suffering an even greater spate of shirking by the accounting staff ever since its employees got access to the Internet on their desktop computers. Why did this not affect the sales staff as much?
If a bank has actual reserves of $40,000 and a 20 percent reserve requirement, then the maximum amount of checkable deposits the bank can have if excess reserves are zero is:
a. $100,000. b. $80,000. c. $300,000. d. $20,000. e. $200,000.
Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had flexible exchange rates, these flows would have had the following effect on the financial account and monetary base
a. Financial account would rise and reserves account would fall. b. Financial account would not change and reserves account would fall. c. Financial account would not change and reserves account would not change. d. Financial account would fall and monetary base would not change. e. Financial account would fall and reserves account would rise.