Answer the following statements true (T) or false (F)
1. When a bank accepts additional deposits, its required reserves and excess reserves will both increase.
2. When a bank grants a loan, the money supply M1 will increase, even if the funds from the loan are not spent.
3. The primary purpose of the reserve requirements for banks is not really to ensure liquidity to meet withdrawals, but rather to allow the Fed some control over the money supply.
4. The granting of a $10,000 loan and the purchase of a $10,000 government bond from a securities dealer by a commercial bank would have the same effect on the money supply.
5. A bank can grant loans up to the amount of its actual reserves.
1. True
2. True
3. True
4. True
5. False
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It is likely that a constitutional amendment that required the government always to run a balanced budget would
a. contribute to a more stable level of output. b. mitigate the crowding-out effect. c. eliminate the economy's automatic stabilizers. d. All of the above are correct.
Refer to the above diagram in which the downsloping linear lines are budget lines and I1, I 2, and I3 comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that:
A) point 2 yields more utility than either 1 or 5. B) points 1 and 5 yield more utility than point 2. C) points 1, 2, and 5 yield equal amounts of utility. D) the levels of utility associated with these three points cannot be compared.
Which statement is true?
A. The Keynesians and the monetarists are proponents of the crowding-out effect. B. The Keynesians and the monetarists are proponents of the crowding-in effect. C. The Keynesians are proponents of the crowding-out effect and the monetarists are proponents of the crowding-in effect. D. The Keynesians are proponents of the crowding-in effect and the monetarists are proponents of the crowding-out effect.
Suppose a person's utility for leisure (L) and consumption (Y) can be expressed as U = Y + L0.5. Assuming a wage rate of $10 per hour, show what happens to the person's labor supply curve when the person wins a lottery prize of $100 per day
What will be an ideal response?