Assume the commercial banking system has checkable deposits of $20 billion and excess reserves of $2 billion when the reserve requirement is 25%. If the reserve requirement is then lowered to 20%, we can conclude that the ________.
A. banking system now has excess reserves of $3 billion
B. Fed has decided that money supply needed to be reduced
C. monetary multiplier has decreased
D. maximum money-creating potential of the banking system has been increased by $7 billion
Answer: A
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The market for bagels contains two firms: BagelWorld (BW) and Bagels'R'Us (BRU). The owners of the two firms decide to fix the price of bagels. The table below shows how each firm's profit (in dollars) depends on whether they abide by the agreement or cheat on the agreement. 
In the Nash equilibrium of this game:
A. both firms cheat on the agreement B. Bagel World cheats and Bagels 'R' Us abides C. Bagel World abides and Bagels 'R' Us cheats D. both firms abide by the agreement
The very low interest rates following the financial crisis of 2007-2009 resulted in:
A) many people moving their funds from CDs and money market accounts to checking accounts in order to have more liquidity without sacrificing much interest B) funds being transferred from checking accounts to time deposits C) further declines in checking accounts that began in the early 1970s D) people switching their funds from checking deposits to CDs in the pursuit of higher interest rates
Economics is the study of decisions made necessary by the problem of unlimited wants and limited means to satisfy them
a. True b. False Indicate whether the statement is true or false
Related to the Economics in Practice on p. 666: When a country opens its markets to free trade, competition ________ and efficiency ________.
A. decreases; improves B. grows; declines C. grows; improves D. decreases; declines