Assume a bank has total deposits of $100,000 and $20,000 is set aside to meet reserve requirements of the Fed. Its required reserve ratio is:
A. $20,000.
B. 20 percent.
C. 0.2 percent.
D. 1 percent.
Answer: B
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Adam Smith's Wealth of Nations, written in 1776, describes the market's invisible hand representing the
A) King of England's control over the colonies. B) control all governments have in organizing the market. C) efficiency the market achieves without the interference of governments. D) inefficiency of markets when governments do not organize them. E) invisible command system that efficiently allocates resources.
The tax multiplier
A) is negative. B) is a measure of how much taxes will fall when income is falling. C) is larger in absolute value as compared to the government spending multiplier. D) is always less than one.
A black market is a market in which
A) goods are traded at prices above their legal maximum prices. B) sales taxes are effectively doubled. C) goods are sold at outlet prices. D) sales take place exclusively at outlet prices.
If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent, American Airlines would pay you
A) $33.33 per year for 30 years plus $1,000 at the end of the 30th year. B) $30 per year for 30 years. C) $30 per year for 30 years plus $1,000 at the end of the 30th year. D) $33.33 per year plus 3 percent per year for 30 years.