Suppose a bank has $3,000 in reserves, $25,000 of deposits, and a 10 percent reserve requirement. What is the amount of excess reserves?
$500
You might also like to view...
Free entry is said to exist in an industry when:
A) all firms entering an industry enjoy economies of scale. B) entry is unfettered by any special legal or technical barriers. C) equal amounts of inputs are available to all firms entering an industry. D) the government subsidizes costs for all new firms entering an industry.
A higher interest rate will lead a firm to purchase less capital because the higher interest rate
a. lowers the marginal product of capital goods b. causes technological change to cease c. lowers the present value of capital goods d. causes economies of scale to be exhausted e. causes the capital market become monopolized
The application of game theory to economics allows us to understand firm behavior in some forms of oligopoly. Game theory suggests that in a two-firm industry, each firm will
a. avoid pricing high when the other prices low b. select high prices and defend that selection because, in the long run, their profits are higher than if they competed by lowering prices c. end up mistaking the other's intentions, which results in low prices and low profit for both in the long run d. end up colluding with the other to form a cartel e. agree with the other not to allow other firms to enter the industry
According to the life-cycle theory of consumption, people tend to ________ during their main working years.
A. consume more than they earn B. save C. accumulate negative wealth D. dissave