Suppose that someone deposits $10,000 into a bank. Assuming a reserve requirement ratio of 20 percent, what will be the eventual increase in checking account balances?
What will be an ideal response?
The short way to figure this out is to multiply the initial cash deposit amount by the reciprocal of the reserve ratio (the money multiplier). Therefore, the eventual increase in account balances will be $50,000.
You might also like to view...
To maximize profits, firms hire labor as long as
A) each additional hour hired produces more additional output than the real wage rate. B) the total hours hired produces more additional output than the real wage rate. C) each additional hour hired produces more additional output than the nominal wage rate. D) the quantity of labor supplied increases as the real wage rate increases. E) workers continue to supply labor to the firm.
A consumer's utility-maximizing combination of goods is given by the bundle that corresponds to the point on
A) an indifference curve that is tangent to the budget constraint. B) the budget constraint where it intersects one of the axes. C) the indifference curve that intersects the horizontal axis. D) the indifference curve that intersects the vertical axis.
Suppose Always There Wireless serves 100 high-demand wireless consumers, who each have a monthly demand curve for wireless minutes of QdH = 200 - 100P, and 300 low-demand consumers, who each have a monthly demand curve for wireless minutes of QdL = 100 - 100P, where P is the per-minute price in dollars. The marginal cost is $0.25 per minute. Suppose Always There Wireless charges $0.25 per minute. If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers, what are the profits from sales to each of the low-demand consumers?
A. $9.38 B. $28.13 C. $153.13 D. $1.00
The prices that people are willing to pay for goods and services mostly depend on:
a. the total utility derived from the goods and services. b. the marginal utility derived from the goods and services. c. the availability of raw materials for producing the goods and services. d. the cost of producing the goods and services. e. whether the goods are legal, since the laws affect the position of both supply and demand curves.