If the Federal Reserve eliminated all reserve requirements the most likely result would be
A) a large number of depository institution failures because they would not have enough liquidity.
B) the Federal reserve would be unable to control the money supply.
C) banks would no longer be able to clear checks at the Federal Reserve because there would be no required reserves.
D) the size of the money multiplier might fluctuate considerably making the Federal Reserve's job of controlling the money supply more difficult.
D
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Economic incentives are designed to make individual self-interest coincide with social interest. According to economists, which of the following methods of pollution control best uses economic incentives to reduce pollution?
A) imposing quantitative limits on the amount of pollution and imposing a penalty for non-compliance with these limits B) rewarding environmental groups for monitoring the activities of private firms that produce products which generate pollution C) requiring the installation of specific pollution control devices D) instituting a system of tradable emission allowances
The Bank of the United States faced opposition from which of the following?
A) local banks who resented the Bank's supervision B) advocates of limited government who distrusted its power C) farmers and small businesses who resented the Bank's interference with their ability to obtain loans D) all of the above
In the long run in a monopolistic competitive industry,
a. economic profits will be positive. b. price will be driven to zero. c. the firm will not operate where MR = MC. d. economic profit will be zero. e. price will exceed average cost.
The Fed sells a U.S. government security and a bank dealer writes a check for the amount. When the check clears
A. reserves increase by the amount of the check because the Fed clears the check by increasing the amount of the bank's deposits with the Fed. B. reserves remain unchanged because the decrease of reserves at the dealer's bank is offset by an increase in the reserves at the Fed. C. reserves have fallen by the amount of the reserves times the reserve ratio, and the money supply falls by the difference between the amount of the check and the fall in the reserves. D. reserves have fallen by the amount of the check because the Fed clears the check by reducing the bank's deposits at the Fed.