Why does the Fed rarely change the reserve requirement?
a. A small adjustment in the ratio can result in major changes that could disrupt the economy.
b. It requires input from bank managers and select other financial figures.
c. To change the reserve requirement, the Fed must obtain permission from the Senate.
d. It has historically had a negative impact on the financial state of the country.
a. A small adjustment in the ratio can result in major changes that could disrupt the economy.
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A decrease in the personal income tax rate ________ disposable income which ________ consumption
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
Banks will hold additional excess reserves when
a. loans to customers look safe and interest rates are high. b. they anticipate a bank audit. c. loans to customers look risky and interest rates are low. d. the economy is booming and there is a large demand for loans.
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
Figure 5.3 presents a firm's marginal cost, average total cost, and average variable cost curves. The firm faces fixed costs of:
A. $20. B. $110. C. $130. D. $4000.