Banks hold some deposits on reserve at the Fed because
A) the Fed requires every bank to hold at least $100 million on deposit at all times.
B) the Fed will insure those deposits, but will not insure regular bank deposits.
C) these are membership dues for being a member bank.
D) these deposits meet the reserve requirements of the Fed.
D
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Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment. Which of the following will happen in the short run?
A) The aggregate demand curve will shift to the right. B) Prices will rise. C) Output will rise. D) Unemployment will rise.
When does the free-rider problem arise?
A) when someone who benefits from a good does not have to contribute to paying for it B) when a firm does not have to advertise, because its customers recommend the product to their friends C) when policymakers ignore opportunity costs in making decisions D) when production of a good generates pollution
With free entry:
A. there is a known and limited number of potential suppliers that can produce a good in the long run. B. there is an unlimited number of firms that can produce a good in the long run. C. the long run market supply curve is vertical at the market quantity. D. the long run market demand curve is horizontal at the market price.
A benefit of an activity received by people not participating in the activity is called a(n):
A. external cost. B. negative externality. C. positive externality. D. winner's curse.