The Fed's power to set the required reserves of commercial banks:
A. provides a certain source of interest income for commercial banks.
B. allows the Fed to control the lending ability of commercial banks and, thereby, control the money supply.
C. prevents banks from hoarding too much vault cash.
D. prevents commercial banks from earning excess profits.
Answer: B
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Which of the following shifts the supply curve of rutabagas rightward? (A rutabaga is a potato-like vegetable.)
A) an increase in the price of a rutabaga B) an exceptionally cold summer that killed much of the rutabaga crop C) a fall in the price of fertilizer used to grow rutabagas D) Both answers A and C shift the supply curve of rutabagas rightward. E) Both answers A and B shift the supply curve of rutabagas rightward.
In evaluating a relationship between x and y, ceteris paribus means other variables
A) are not relevant to x and y. B) move in opposite directions to x and y. C) are not changing while x and y change. D) move in the same direction as x and y.
In the above figure for a monopolistically competitive firm, the total cost at the profit-maximizing point is
A) $480. B) $400. C) $540. D) $880.
Last year the Olsen family earned $70,000. This year their income is $77,000. In an economy with an inflation rate of 8 percent, we can conclude that the Olsen's nominal income:
A. and real income both increased. B. and real income both decreased. C. increased, but their real income decreased. D. decreased, but their real income increased.