Suppose the central bank of Altoska has raised its reserve requirements from 10 percent to 12 percent. If Trust Bank, a commercial bank, finds that it is not holding enough in reserves to meet the higher requirements, then it is likely to:
a. increase its excess reserves
b. buy bonds to increase the size of its reserve assets.
c. reduce the quantity of money and loans on the balance sheet.
d. borrow from the central bank for a short term.
d
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If exchange rates are allowed to fluctuate freely and the US demand for Japanese yen increases which of the following will happen?
a. the US balance of trade deficit will worsen in the long run b. Americans will have to pay more for Japanese goods c. It will be more expensive for the Japanese to buy American real estate d. the dollar will appreciate e. more Americans will want to travel to Japan
Comparative advantage means the ability to produce a good or service
A) at a lower selling price than any other producer. B) at a lower opportunity cost than any other producer. C) of a higher quality than any other producer. D) at a higher profit level than any other producer.
Market failure can result from all of the following except
A. Regulation. B. Market power. C. Monopoly. D. Restricted output.
A firm that has a well-earned reputation for providing high quality:
A. will not survive in a market if low quality is provided at a lower price. B. has found a way to address the problem of adverse selection. C. has found a way to address the moral hazard problem. D. has found a way to address the free-rider problem.