Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio is 10%. How many dollars is Acme allowed to use to seek profits?
A) 0
B) $100,000
C) $900,000
D) $1 million
E) $10 million
C
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A person's consumption possibilities is defined by the budget line because
A) it marks the boundary between what is affordable and unaffordable. B) it represents the individual's preference for different combinations of goods. C) it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources. D) all consumers must consume on their budget line.
Which statement is true?
A. The entire expansion from the trough to the peak is the recovery phase. B. The entire contraction from the peak to the trough is the recession phase. C. Recessions never last more than one year. D. Prosperity is the first phase of expansion.
Other things being equal, if input prices rise in a country, then there would be
A) cost-push inflation. B) demand-pull inflation. C) cost-push deflation. D) more production and a lower price level.
Bank runs are a possibility because
A) the FDIC is inefficient. B) bankers are often poor businesspeople. C) in difficult times people want currency instead of demand deposits. D) banks do not keep enough reserves to cover all their depository liabilities.