Suppose a banking system has a required reserve ratio of 0.15. How much can the money supply increase in response to a $1 billion increase in excess reserves for the whole banking system?
A. $150 million.
B. $6.67 billion.
C. $1 billion.
D. $15 billion.
Answer: B
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Suppose that the production function for the economy is: Y = AK1/4L3/4. Assume that A = 1,000, the current capital stock is $32,000 billion, and the labor force is 120 million (or 0.120 billion) workers
All else equal, if the capital stock increased by $8,000, the value of the marginal product of labor will be A) $18,021.09. B) $20,223.24. C) $21,625.30. D) $60,070.29.
The difference between a supply schedule and a supply curve is that a supply schedule
a. incorporates demand and a supply curve does not. b. incorporates profit and a supply curve does not. c. can shift, but a supply curve cannot shift. d. is a table, and a supply curve is drawn on a graph.
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
What is meant by the statement that "optimal decisions are made at the margin"?
What will be an ideal response?