There is $5,000,000 of currency in Econland, all held by banks as reserves. The public does not hold any currency. If the banks' desired reserve/deposit ratio is 0.25, then the money supply equals:
A. $6,250,000
B. $10,000,000
C. $5,000,000
D. $20,000,000
Answer: D
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Federal Reserve Bank directors
A) have relatively little influence in monetary policy decisions. B) determine bank reserve requirements. C) determine bank capital requirements. D) set the federal funds rate.
An increase in the minimum wage will tend to cause which of the following to occur?
A) an increase in the size of the surplus of labor B) a leftward shift in the demand for labor C) a rightward shift in the supply of labor D) a reduction in the unemployment rate
Looking at housing cycles over time (the cycles get smaller with each successive wave) the first wave typically spans
a. 0 to 5 years b. 5 to 10 years c. 10 to 15 years d. 15 to 20 years e. 25 to 30 years
What adjusts to restore general equilibrium after a shock to the economy?
A. The FE line B. The IS curve C. The labor supply curve D. The LM curve