Assume that the reserve requirement is 20 percent. First National Bank has vault cash and deposits with the Fed of $80 million, loans and securities of $320 million, and demand deposits of $400 million. First National:
a. could extend a maximum of $40 million of additional loans.
b. could extend a maximum of $20 million of additional loans.
c. could extend a maximum of $10 million of additional loans.
d. is not in a position to extend additional loans.
d
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According to purchasing power parity, the foreign exchange market will
A) undervalue the dollar if inflation in the United States is greater than it is elsewhere. B) no longer demand dollars if the inflation rate in the United States exceeds that of other nations. C) adjust the value of the exchange rate to reflect differing inflation rates between nations. D) result in a flow of dollars out of the United States whenever its rate of inflation is below that of other nations.
As a percentage of GDP, all of the following federal government expenditures are expected to increase from 2012 to 2042 except
A) Social Security. B) Medicare and Medicaid. C) the net interest on the federal debt. D) national defense.
The arguments of Kessel and Alchien (1959) on the terms of trade and the question of "who paid for the Civil War (1861–1865)" conclude that 40 percent of the war's burden fell on
(a) those who exported manufactures. (b) those who purchased imports. (c) farmers alone. (d) the economy as a whole.
A tax system based on the ability-to-pay principle claims that all citizens should
a. pay taxes based on the benefits they receive from government services. b. pay the same amount in taxes. c. pay taxes based on consumption rather than income. d. make an equal sacrifice.