Assume that the required reserve ratio is 5 percent. If a commercial bank has $2 million cash in its vault, $1 million in government securities, $3 million on deposit at the Fed, and $60 million in checkable deposits, then its excess reserves equal:
A. $0 million
B. $2 million
C. $5 million
D. $6 million
B. $2 million
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Economists use the term "demand" to refer to
A. a particular price-quantity combination on a stable demand curve. B. an upsloping line on a graph that relates consumer purchases and product price. C. a schedule of various combinations of market prices and quantities demanded. D. the total amount spent on a particular commodity over a fixed time period.
An example of a public good is
A) national defense services. B) a Ford truck. C) a loaf of bread. D) a home computer.
The federal funds rate is
A. the interest rate on bonds issued by the federal government. B. the interest rate paid on reserves held with the Fed. C. the interest rate at which banks can borrow excess reserves from other banks. D. none of these.
A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax is
A) zero. B) positive but less than $50,000 per year. C) $50,000 per year. D) more than $50,000 per year.