When banks hold more reserves than are required, such reserves are called
A) total reserves.
B) required reserves.
C) excess reserves.
D) loan reserves.
Answer: C) excess reserves.
You might also like to view...
Assume that people experience a one-time 50 unit increase in their consumption (i.e. the intercept of the consumption function increases by 50). In this case
a. equilibrium income will rise by 50 units times the investment multiplier. b. equilibrium income will rise by 50 units. c. equilibrium income will rise by 50 units times the tax multiplier. d. equilibrium income will not change because this increase is temporary.
Mr. Calhoun owned a worn-out piece of farmland for growing cotton, which he had been unable to rent for years. Suddenly he was getting offers from cotton farmers to lease his land. What is the most likely explanation of this?
a. The price of cotton went down. b. The physical productivity of the land went up. c. Taxes on land went up. d. The price of cotton went up.
Consider the accompanying diagram, which shows an investor who can choose to hold the risky assets on the efficient set and/or the risk-free asset labeled R.
(i) Describe the portfolio held by this investor.
(ii) Suppose the expected return of the risk-free asset increases. Complete the diagram to show how the investor responds to this change. Describe how the market portfolio changes, and describe the new portfolio held by the investor.
(iii) Assume that as the investor's income rises, he prefers that his portfolio have a higher expected return and a lower standard deviation. When the expected return of the risk-free asset rises, does the expected return of the investor's portfolio rise or fall? Does the standard deviation of the investor's portfolio rise or fall? Explain, using substitution and income effects.
Social Security pension benefits are
A. subject to income taxes for those with certain income levels. B. non-taxable for all retirees. C. subject to state, but not federal, income taxes. D. subject to capital gains taxes.