The commercial banking system, because of a recent change in the required reserve ratio from 8 percent to 10 percent, finds that it is $50 million short of reserves. If it is unable to obtain any additional reserves, it must reduce deposits and money supply by:
A. $250 million
B. $625 million
C. $500 million
D. $50 million
C. $500 million
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For restrictive covenants to help reduce the moral hazard problem, they must be ________ by the lender
A) monitored and enforced B) written in all capitals C) easily changed D) impossible to remove
An indication that Insurance companies anticipate adverse selection is
a. they do not require a deductible b. they do not classify clients into different risk types according to their claim history c. they do not classify clients into different risk types according to pre-existing conditions d. they require a co-payment
According to Keynesians, an increase in the money supply will have its greatest impact on GDP when the aggregate demand curve intersects:
A. the vertical portion of the aggregate supply curve. B. the upward sloping portion of the aggregate supply curve. C. the horizontal portion of the aggregate supply curve. D. either the upward sloping or the vertical portions of the aggregate supply curve.
Which of the following is generally considered a desirable outcome of government intervention when expanding the economy?
A. A higher price level. B. Higher unemployment rates. C. More jobs. D. Greater deficits.