An individual bank can create deposits to the extent of its
A. excess reserves.
B. required reserves.
C. total reserves.
D. deposits.
A. excess reserves.
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The amount of investment demand at each interest rate falls. If the Fed holds to an unchanged interest rate target, the change in GDP is __________ if it had held to an unchanged money supply target
A) greater than B) less than C) the same as
If a firms cuts inputs in half, and output falls by more than half, then there are
A) increasing returns to scale. B) decreasing returns to scale. C) constant returns to scale. D) decreasing marginal returns.
Suppose that Argentina and Chile are both engaged in the production of copper and wheat, and that Argentina has an absolute advantage in the production of both goods. If Chile has a comparative advantage in the production of copper, then Chile
A. has a lower opportunity cost for copper, which means that it should specialize in production of copper and engage in trade. B. has a lower opportunity cost for producing copper, but specialization is not feasible because Argentina has a lower monetary cost of copper production. C. should continue to produce copper, but only for domestic consumption, because trade is not a viable option. D. has a higher opportunity cost for copper, which means it should specialize in the production of wheat and engage in trade.
Refer to the table below. If European governments decided to fix the price of a euro at $0.80, they would have to:
The table below shows the supply and demand schedules for the European euro.
A. Buy 286 euros
B. Buy 114 euros
C. Sell 114 euros
D. Sell 286 euros