Suppose the reserve requirement is 5 percent. If reserves fall by 100, the money supply will decline by:
A. 100.
B. 200.
C. 1,000.
D. 2,000.
Answer: D
You might also like to view...
Which of the following is a discretionary fiscal policy action?
A) a progressive tax system that leads to an increase in income tax revenues during an economic boom B) a deliberate tax cut when the economy experiences high unemployment C) an increase in the amount of unemployment compensation because more people become unemployed D) an increase in Supplemental Security Income payments when more people become eligible for the benefits
Suppose a banking system has $120 million in deposits, a required reserve ratio of 20 percent, and total bank reserves for the whole system of $100 million. Then the potential increase in deposit creation for the whole system is equal to
A. $0. B. $76 million. C. $380 million. D. $120 million.
Suppose that all countries eliminate their barriers to trade. The HeckscherOhlin model predicts that:
a. wages should become more equal throughout the world. b. wages should become more unequal throughout the world. c. the volume of international trade should fall. d. there should be increased migration of labor among countries.
Refer to the table below. If the market price for the firm's product is $180, the competitive firm will produce:
The following table shows cost data for a firm that is selling in a purely competitive market.
A. 5 units and earn economic profits of $100
B. 6 units and earn economic profits of $120
C. 7 units and earn economic profits of $238
D. 8 units and earn economic profits of $278