On a certain date, the banking system had $40 billion in excess reserves. The legally required reserve ratio was 20 percent. Potentially, if these funds were loaned and eventually the entire amount re-deposited with a bank, the banking system as a whole could increase the money supply by
a. a maximum of $40 billion.
b. a maximum of $160 billion.
c. a maximum of $200 billion.
d. more than $200 billion.
C
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Which statement is NOT true regarding emerging markets?
A) Emerging market financial institutions have generally proven to be weaker than those in industrialized countries. B) Emerging markets are the capital markets of poorer, developing countries that have liberalized their financial system to allow private asset trade with foreigners. C) Countries with emerging markets include Brazil, Mexico, and Thailand. D) Countries with emerging markets have been unable to liberalize their financial systems to allow private trade with foreigners. E) Emerging market financial institutions contributed to the financial crisis of 1997-1999.
The aggregate demand for good X is Q = 20 - P, and the market price is P = $8. What is the maximum amount that consumers are willing to pay for the quantity demanded at this price?
A) $72 B) $96 C) $144 D) $168
Economists have long pondered the reasons why people hold money. Some reasons seem to be more important than others. Perhaps not among the most important but still a reason why people demand money is the precautionary motive. This precautionary demand for money refers to the demand
a. to satisfy everyday transactions b. for investment purposes c. for speculative purposes such as having money available to take advantage of stock purchases d. to protect against inflation e. to cover unexpected events
Because a price floor causes:
A. a surplus, everyone will be better off. B. a shortage, rent-seeking will occur. C. a surplus, some producers may ultimately lose because they won't have enough customers. D. a shortage, some form of rationing must occur.