The supply of high-powered money is $100,000 and the money supply is $500,000. If every individual wishes to hold 5% of his or her deposits in the form of cash, then the bank reserve-holding ratio must be
A) 0.25 if banks have made all loans acceptable by the Federal Reserve requirements.
B) 0.20 if banks have not made all loans acceptable by the Federal Reserve requirements.
C) 0.17 if banks have not made all loans acceptable by the Federal Reserve requirements.
D) 0.16 for any of the legally required reserve amount.
D
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When a German company purchases a U.S. company for $20 million, in the balance of payments the value of that transaction is recorded in the
A) current account. B) investment account. C) official purchases account. D) capital and financial account. E) purchase account.
Refer to Figure 4-18. The price buyers pay after the tax is
A) $12. B) $8. C) $5. D) $3.
In the classical macroeconomic model, a decrease in the real wage would cause
a. a decrease in the marginal product of labor and an increase in the quantity demanded for labor. b. an increase in the marginal product of labor and an increase in the quantity demanded for labor. c. no change in the quantity demanded for labor. d. an increase in both the supply of and demand for labor.
The derived demand for borrowed funds has the characteristic negative slope of any demand curve
a. True b. False Indicate whether the statement is true or false