Assume the reserve ratio is 25 percent and Federal Reserve Banks buy $4 million of U.S. securities from the public, which deposits this amount into checking accounts. As a result of these transactions, the supply of money is:
A. not directly affected, but the money-creating potential of the commercial banking system is
increased by $12 million.
B. directly increased by $4 million and the money-creating potential of the commercial
banking system is increased by an additional $16 million.
C. directly reduced by $4 million and the money-creating potential of the commercial banking
system is decreased by an additional $12 million.
D. directly increased by $4 million and the money-creating potential of the commercial
banking system is increased by an additional $12 million.
D. directly increased by $4 million and the money-creating potential of the commercial
banking system is increased by an additional $12 million.
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Suppose that the government of New York state promises to decrease taxes to a firm if it decides to stay in New York instead of moving to another state. This policy on the part of the state constitutes ________, to make the ________ of the firm remaining in New York.
A) an incentive; marginal benefit exceed the marginal cost B) an incentive; marginal cost exceed the marginal benefit C) a command; marginal benefit exceed the marginal cost D) a command; marginal cost exceed the marginal benefit
In many corporations, the managers of the corporation run the corporation, although the shareholders own the corporation. In this situation,
A) there is separation of ownership from control. B) there are no outside directors on the board of directors. C) there is no corporate governance. D) there are no inside directors on the board of directors.
An economy with only a domestic sector is called:
A) a mixed economy. B) an open economy. C) a closed economy. D) a command economy.
For private goods allocated in markets,
a. prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. b. prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. c. the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. d. the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.