LRE. Suppose there is an increase in SRAS. As wages eventually react to the new situation, what will happen? Wages will _____ and SRAS will shift ___
a. increase; right
b. increase; left
c. decrease; right
d. decrease left
Answer: b. increase; left
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What would happen to the availability of credit if banks chose to either increase or decrease the percentage of deposits they hold as reserves?
What will be an ideal response?
If the interest rate is 10%, then $1 today is worth how much one year from now?
A) $1.10 B) $1.00 C) $0.91 D) $0.90
In a market where the equilibrium price is $7, any price higher than $7 would cause
a. a balanced demand and supply b. an excess supply c. an excess demand d. none of the above
The Fed buys $1 million in bonds from a bond dealer. The bond dealer's bank experiences
A. an increase in assets of $1 million as its reserves increase and a decrease in liabilities as its transactions deposits fall. B. a decrease in assets of $1 million as the checking account of the bond dealer increased, and a decrease in liabilities as the bank's deposits with the Fed increased by $1 million. C. an increase in assets of $1 million as its reserves increase and an increase in liabilities of $1 million as the deposits in the bond dealer's transactions account increases by $1 million. D. no change in assets or liabilities. Assets both increased and decreased by the amount of the check.