A bank currently has checkable deposits of $100,000, total reserves of $30,000, and loans of $70,000. If the required reserve ratio is lowered from 20 percent to 15 percent, this bank can increase its loans by:
A. $10,000.
B. $15,000.
C. $75,000.
D. $5,000.
Answer: B
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Use the following information to answer the question below. It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. If the government intervenes and corrects the externality in the situation described above, we would expect
A. production in the paper mills to decrease. B. production of the hydroelectric power plants to decrease. C. the price of paper from the mills to decrease. D. the output of the paper mills to increase.
Which of the following statements is true?
A) When an industry achieves a long-run competitive equilibrium, industry output will not change in the future. B) When an industry reaches a long-run competitive equilibrium, the typical firm in the industry breaks even. C) A long-run competitive equilibrium can only be achieved in constant-cost industries. D) A long-run competitive equilibrium outcome is not economically efficient.
When the Federal Reserve increases the money supply, people spend more because they now have more money
Indicate whether the statement is true or false
The short-run Phillips curve is based on the assumption of: a. a direct relationship between the inflation rate and unemployment. b. an inverse relationship between the inflation rate and unemployment. c. no relationship between the inflation rate and unemployment
d. a permanent trade-off between the inflation rate and unemployment.