The manager of the bank where you work tells you that the bank has $400 million in deposits and $340 million dollars in loans. The Fed then raises the reserve requirement from 5 percent to 10 percent. Assuming everything else stays the same, how much is the bank holding in excess reserves after the increase in the reserve requirement?
a. $0
b. $20 million
c. $40 million
d. $60 million
b
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A fall in the user cost of capital
A) could occur as a result of a higher depreciation rate. B) would lead to more capital-intensive methods of production. C) would lead to less capital-intensive methods of production. D) could occur as a result of a decrease in the marginal product of capital.
If the minimum wage is set at a level above the equilibrium wage:
A. it will have no effect. B. it will be a nonbinding minimum wage. C. it could cause unemployment. D. All of these are true.
Characteristics of the short run include: a. at least one fixed input
b. insufficient time for firms to enter or leave the industry in question. c. the applicability of the law of diminishing marginal product. d. all of the above.
The Italian government collects a smaller amount of the taxes it is owed than the U.S. government. Other things being equal,
a. U.S. and Italian GDP should be equal. b. U.S. GDP should be higher than Italian GDP. c. U.S. GDP should be lower than Italian GDP. d. U.S. residents are better off than Italian residents.