In graph 1, the quantity shifts from q1 to q2. What change in graph 2 causes this to happen?
a. Demand decreases.
b. Demand increases.
c. Supply decreases.
d. Supply increases.
b. Demand increases.
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Assuming all excess reserves are loaned out, currency holdings by the public are zero, and a reserve ratio of 20 percent, an initial deposit of $850 will lead to total deposits of
A) $425. B) $850. C) $4,250. D) $42,500.
The determinants of labor demand include:
A. culture and other opportunities. B. supply of other factors and output prices. C. culture and technology. D. culture and population.
The rational expectations theory indicates that expansionary policy will:
a. stimulate real output in the long run but not in the short run. b. expand real output and employment if the public quickly anticipates the effects of the expansionary policy. c. equalize real and nominal interest rates during lengthy periods of inflation. d. fail to increase employment because individuals will anticipate it and take actions that will offset its impact.
The less liquid markets are the:
A. smaller the supply of loanable funds, and the slower the growth in the economy. B. larger the supply of loanable funds, and the slower the growth in the economy. C. smaller the supply of loanable funds, and the faster the growth in the economy. D. larger the supply of loanable funds, and the faster the growth in the economy.