One of the most serious effects of a banking panic is that
a. banks will not earn as much profit
b. banks will no longer be trusted by the public
c. people will not place their excess money in banking accounts
d. people may lose any accrued interest on their accounts
e. large withdrawals of cash lead to a severe decrease in reserves and ultimately in the money supply
E
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Suppose Trust Bank has $500 million in assets and $400 million in liabilities. The Fed purchases $45 million in bonds from the bank. Which of the following is a likely consequence of the Fed's action?
a. An increase in the bond holdings of Trust Bank by $45 million and a decrease in the bank's reserves by $45 million b. A decrease in both the bond holdings and reserves of Trust Bank by $45 million c. An increase in both the bond holdings and reserves of Trust Bank by $45 million d. A decrease in the bond holdings of Trust Bank by $45 million and an increase in the bank's reserves by $45 million
Which of the following would cause the price of the dollar to rise?
A) a fall in bond prices B) an increase in bond prices C) a decrease in interest rates D) a fall in the exchange rate
An improvement in school quality translates into an increase in which model parameter?
A) H B) z C) b D) 1-u
For goods on which a relatively small portion of income is expended, _____
a. income effects will be small relative to substitution effects b. income effects will be large relative to substitution effects c. income effects will be about the same as substitution effects d. there will be no income effects.