The money supply is $10 million, currency held by the nonbank public is $2 million, and the reserve—deposit ratio is 0.2. Bank reserves are equal to
A) $1.6 million.
B) $2 million.
C) $4 million.
D) $8 million.
A
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The real interest rate bringing the supply of saving equal to the demand for saving is an example of the:
A. cost-benefit principle B. equilibrium principle. C. scarcity principle. D. principle of increasing opportunity cost.
Refer to the scenario above. Suppose you decide to buy a Toyota Corolla. You value the car for $10,000. You don't know it, but the car dealer values it for $8,500
If you have a zero value for poor-quality cars, what is the most that would you be willing to pay for the car? A) $3,000.50 B) $6,666.67 C) $10,000 D) $5,000
Banks require collateral for loans in order to
A) ensure that borrowers have significant amounts of their own funds invested in their businesses. B) charge higher interest rates on loans. C) reduce their tax liability on the interest they collect on loans. D) reduce the total amount they are obliged to lend to any one borrower.
When the Fed sells government securities, it:
a. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public. b. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public. c. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public. d. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public. e. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.