Sam deposits money into an account with a nominal interest rate of 4 percent. He expects inflation to be 1.5 percent. His tax rate is 32 percent. Sam's after-tax real rate of interest
a. will be 1.2 percent if inflation turns out to be 1.5 percent; it will be higher if inflation turns out to be lower than 1.5 percent.
b. will be 1.2 percent if inflation turns out to be 1.5 percent; it will be lower if inflation turns out to be lower than 1.5 percent.
c. will be 1.7 percent if inflation turns out to be 1.5 percent; it will be higher if inflation turns out to be lower than 1.5 percent.
d. will be 1.7 percent if inflation turns out to be 1.5 percent; it will be lower if inflation turns out to be lower than 1.5 percent.
a
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Suppose that the required reserve ratio is 10 percent and you withdraw $25,000 from Comerica Bank. What is the deposit multiplier? What is the total decrease in deposits in the banking system? What is the change in the money supply?
What will be an ideal response?
The reserve requirement is:
A. the regulation that sets the minimum fraction of deposits banks must hold in reserve. B. the dollar amount of cash banks must keep on hand and not loan out. C. currently set at $2 million for most banks. D. a loose guideline for how much banks must hold in reserves.
In the United States, which is the largest dollar figure?
A) disposable personal income B) gross domestic product C) per-capita GDP D) personal income
Marginal output and marginal physical product are
A. directly related. B. inversely related. C. weakly related. D. identical.