Assume that households and businesses deposit $5000 in this bank and that this currency is added to the bank’s reserves. In column (1) show the bank’s balance sheet after this occurs. Is there a change in the money supply? In column (2) show what would happen if the bank now loans all of its excess reserves to a depositor. Is there a change in the money supply?
Suppose the First National Bank has the following simplified balance sheet. The reserve ratio is 20%.
No, currency has been reduced dollar-for-dollar with the $5000 increase in check able deposits. Yes, the $4000 excess reserves increase check able deposit money by $4000.
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One point virtually all economists agree on when defining money is that: a. money must be spendable
b. money must be liquid. c. money must be accepted as payment. d. all of the above are correct.
If we produce one more bottle of water:
a) we incur a marginal cost. b) the marginal social benefit from bottled water increases. c) the price must rise. d) we must move away from equilibrium e) we act efficiently.
Real shocks to one area of the economy:
A. can be amplified and transmitted to other areas of the economy. B. generally remain isolated to that area of the economy. C. can cause nominal shocks to other areas of the economy. D. always become weaker as they spread to other areas of the economy.
Which of the following statements regarding the Lorenz curve is FALSE?
A) A Lorenz curve is a geometric representation of the distribution of income. B) A Lorenz curve that is perfectly straight represents complete income equality. C) The less bowed is a Lorenz curve, the less equally income is distributed. D) The more bowed is a Lorenz curve, the more unequally income is distributed.