If the reserve requirement is 12 percent and banks desire to hold no excess reserves, when a bank receives a new deposit of $1,000,
a. it must increase its required reserves by more than $150.
b. its total reserves initially increase by $120.
c. it will be able to make new loans up to a maximum of $880.
d. None of the above is correct.
c
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The nominal exchange rate:
A. expresses the value of goods in one country in terms of the same goods in another country. B. expresses the value of goods in one country in terms of another country's currency. C. is the stated rate at which one country's currency can be traded for another country's goods and services. D. is the stated rate at which one country's currency can be traded for another country's currency.
An electronics company purchases a food company. This is an example of:
A. cointegration. B. vertical integration. C. horizontal integration. D. conglomerate integration.
When two goods are substitutes, their cross price elasticity of demand
A. infinity. B. negative. C. 0. D. positive.
Related to the Economics in Practice on page 83: Which of the following best explains why the people who wait for hours to acquire tickets to free performances earn less on average than the people who actually see those performances?
A. High-wage individuals are more likely to have schedule conflicts that prevent them from using their tickets. B. People interested in live performances are likely to have access to other forms of entertainment, such as television and radio. C. The value of time spent waiting in line is less for people who earn less money. D. People who earn more money are less likely to be aware of the opportunity to acquire free tickets.