When economists say that banks must hold a percentage of their total deposits in reserve form, what does this mean?
A) It means that banks must hold a fraction of their customers' deposits either as bank deposits at the Federal Reserve, or as vault cash, or both.
B) It means that banks reserve the right to turn away customers a certain percentage of the time.
C) It means that the fraction of vault cash a bank has cannot be greater than the fraction of bank deposits (it has) at the Federal Reserve.
D) Essentially, it means that total reserves are greater than required reserves.
E) none of the above
A
You might also like to view...
When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is
A) U.S.-made goods become relatively cheaper compared to French-made goods. B) French citizens are more likely to buy U.S.-made goods. C) U.S. citizens are less likely to buy French-made goods. D) All of the above answers are correct.
The deadweight loss a tax causes depends on all of the following except:
A. how responsive buyers and sellers are to a price change. B. the price elasticity of supply. C. the price elasticity of demand. D. who the tax is imposed upon.
The situation in which actual output exceeds potential output
a. is impossible because all resources are employed to produce potential output b. is possible only in times of high unemployment c. is possible only if the unemployment rate is negative d. is possible only in the long run e. creates pressure for inflation
If prices of goods and services are inflexible, then:
A. A negative demand shock would lead to increased real GDP in the short run B. A positive demand shock would lead to increased real GDP in the short run C. A negative demand shock would have no short-run effect on real GDP D. There would be no short-run demand shocks