In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is
a. 14 percent.
b. 12.5 percent.
c. 8 percent.
d. None of the above is correct.
b
You might also like to view...
"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect? Briefly explain your answer
What will be an ideal response?
Suppose a paper mill earns $1,000,000 in profits when it pollutes a river, and it can abate pollution at a cost of $75,000. The effects of the pollution are confined to a single farmer who earns $400,000 if the water he uses from the river is clean and $300,000 if it's polluted. Suppose there is no law preventing the firm from polluting the river. Which of the following describes an efficient outcome in this case?
A. The farmer is unable to pay the owner of the mill enough to get him to stop polluting. B. The owner of the mill pays the farmer $87,500 in compensation for its pollution. C. The farmer pays the owner of the mill $112,500 to stop polluting. D. The farmer pays the owner of the mill $87,500 to stop polluting.
Which of the following is NOT a wage or employment strategy that a union would follow?
A) Set a maximum wage rate such that a shortage of workers will result. B) Set a wage rate such that all workers that want to find a job can find a job. C) Set a wage rate that will maximize the income of its members. D) Set a wage rate that will maximize the income of only some of its members.
In economics, we assume rational decisions are made when individuals weigh:
A. the sunk costs versus the benefits of an action. B. the sunk costs versus the opportunity costs of an action. C. the opportunity costs versus the benefits of an action. D. the opportunity and sunk costs versus the benefits of an action.