If all banks are subject to a uniform 20% reserve requirement and demand deposits are the only form of money, a $1,000 open market sale by the Fed would cause the money supply to
A. increase by $1,000.
B. decrease by $1,000.
C. decrease by $5,000.
D. increase by $5,000.
C. decrease by $5,000.
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If a U.S. company imports 10 Toyotas from Japan at $15,000 each, and the Japanese company buys airline tickets on a U.S. airline with the money, how does this affect the U.S. balance of payments accounts?
A) Decline in merchandise trade; increase in financial account B) Decline in financial account; increase in merchandise trade C) Decline in merchandise trade; increase in services D) Decline in services; increase in merchandise trade
A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home. The researcher included all costs including the imputed value of time involved to prepare the meal at home. This study illustrates the
a. value of marginal analysis. b. law of increasing costs. c. difference between real costs and money costs. d. cost disease of the service sector.
The simple circular-flow model for households and firms is an economic model that focuses on the interaction between households and firms. Which of the following statements regarding the model is correct?
a.) the model is missing the interaction between firms and the resource market. Therefore, it cannot predict well. b.) the model is missing the interaction between households and the product market. Therefore, it cannot predict well c.) the model has too many simplifying assumptions, and it cannot be used to make predictions about the real world d.) the model is a simplification of the real world, and it can be used to make predictions about the real world e.) the model is missing the interaction between firms and the produce market. Therefore, it cannot predict well
After the Federal Reserve increases reserves in the banking system, banks create new deposits through multiple rounds of lending and accepting deposits until the:
A. actual reserve/deposit ratio is greater than the desired reserve/deposit ratio. B. Federal Reserve requires them to stop. C. actual reserve/deposit ratio is equal to the desired reserve/deposit ratio. D. deposit insurance limit is reached.