Describe how actual reserves are calculated. Explain the difference between required reserves and excess reserves. How do reserves affect the amount of loans a bank can make?
What will be an ideal response?
Actual reserves are equal to the bank's reserves it keeps on deposit at the Federal Reserve plus the currency in the bank's vault. Required reserves are equal to the required reserve ratio multiplied by the bank's deposits. Banks might want to keep reserves over and above their required reserves. The amount of reserves banks want to keep is their desired reserves. Excess reserves equal actual reserves minus desired reserves. A bank can make loans equal to the amount of its excess reserves.
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Define horizontal and vertical equity and discuss the concepts with respect to legitimacy and usefulness
What will be an ideal response?
Which of the following products can be sold through mass advertising?
a. A new electrocardiogram machine to be used by medical examiners b. A mainframe computer installation c. A new health insurance policy d. A new brand of baby diapers
Private investment equals
a. private savings + public savings + trade deficit. b. private savings + public savings+ government budget surplus. c. private savings + public savings + trade surplus. d. private savings + public savings + government budget deficit.
The clearest sign of economic growth is a(n)
a. increase in nominal GDP. b. increase in real GDP. c. decrease in nominal GDP. d. increase in nominal GDP.