Suppose the required reserve ratio is 10%. If a bank has total reserves of $80,000 and checkable deposits of $550,000, what is the amount of the bank's excess reserves?
A) $25,000
B) $55,000
C) $80,000
D) $250,000
Ans: A) $25,000
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Deflation refers to
A) a falling price level. B) a decrease in the rate of inflation. C) Both A and B are correct. D) None of the above is correct.
An example of a price floor is
a. the regulation of gasoline prices in the U.S. in the 1970s. b. rent control. c. the minimum wage. d. any restriction on price that leads to a shortage.
Starting from short-run equilibrium, wage rates rise. What is the effect on the price level and Real GDP in the short run?
A) The price level rises and Real GDP falls. B) The price level falls and Real GDP rises. C) The price level rises and Real GDP rises. D) The price level falls Real GDP falls.
Price elasticity of demand measures:
A. the change in price brought about by a change in consumer demand. B. how consumers change their purchases in response to a change in income. C. how consumers change their purchases in response to a change in the price of a substitute good. D. how consumers change their purchases in response to a change in the price of a product.