Table 13.1XYZ Bank Balance SheetAssetsLiabilitiesTotal reserves$100,000Transactions accounts$400,000Loans300,000??Refer to Table 13.1. If XYZ Bank has a required reserve ratio of 10 percent and loan proceeds are not redeposited, it can legally increase its loans by
A. $10,000.
B. $60,000.
C. $40,000.
D. $20,000.
Answer: B
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Rate of return regulation is designed to allow a natural monopoly to
A) make an economic profit. B) make zero economic profit. C) underestimate its average cost. D) compete with any firm entering the market. E) make zero normal profit.
Because of the shortcomings of concentration ratios, some economists prefer another measure of competition called
A) the Herfindahl-Hirschman Index. B) the Economic Profit Index. C) the Competition Index. D) the Marginal Revenue-Marginal Cost Index.
For a nondiscriminating monopolist, which of the following is false?
a. The monopolist produces where MR = MC. b. The monopolist's marginal revenue curve is the same as its demand curve. c. The monopolist will never produce in the inelastic range of its demand curve. d. A monopolist is more allocatively inefficient than a perfectly competitive firm. e. The monopolist produces where P > MC.
GDP is not a perfect measure of welfare because it
a. treats a dollar spent on candy bars the same as a dollar spent on education b. treats a dollar spent on exports the same as a dollar spent on imports c. double counts the value of leisure time d. double counts depreciation e. counts illegal activities in the underground economy