If a bank gets a $100,000 new deposit, chooses to lend out $85,000, and increases its excess reserves by $5,000 at the same time, then the reserve requirement is:
a. 10%
b. 15%.
c. 20%.
d. unable to be determined from the information given.
a
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Production efficiency occurs when production ________
A) is at a point beyond the production possibilities frontier B) is on the production possibilities frontier or inside it C) is at any attainable point D) is on the production possibilities frontier
In a world of rational expectations,
A) an anticipated increase in money supply leads immediately to higher nominal interest rates. B) an anticipated increase in money supply leads immediately to lower nominal interest rates. C) an unanticipated increase in money supply leads immediately to higher nominal interest rates. D) an unanticipated decrease in money supply leads immediately to lower nominal interest rates.
Tax incentives that encourage saving, investment, and work will shift the AS curve to the right.
Answer the following statement true (T) or false (F)
Use the aggregate expenditures model and assume the marginal propensity to consume (MPC) is 0.80. An increase in government spending of $1 billion would result in an increase in GDP of:
A. $0.8 billion. B. $1.0 billion. C. $5.0 billion. D. $8.0 billion.