When the central bank sells $1,000,000 worth of government bonds to the public, the money supply:
A. increases by $1,000,000.
B. decreases by $1,000,000.
C. decreases by more than $1,000,000.
D. decreases by less than $1,000,000.
Answer: C
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The banking system currently holds $20 billion in required reserves and zero excess reserves. The Fed lowers the required reserve ratio from 15 percent to 12.5 percent. Assuming that there are no cash leakages, the resulting change in checkable deposits (or the money supply) is approximately
A) $2.7 billion. B) $1.5 billion. C) $2.0 billion. D) $12.5 billion. E) $26.6 billion.
The income effect is the
A) increase in the interest rate caused by an increase in Real GDP.
B) increase in the interest rate due to a higher expected inflation rate.
C) decrease in the interest rate due to an increase in the supply of loanable funds.
D) change in national income brought about by a change in interest rates.
E) rate of change in national income brought about by a change in the supply of money.
Sulfur Dioxide Discharged (Tons)Firm AFirm B10$10,000$12,000911,00017,000813,00022,000716,00026,000620,00033,000Table 16.4Table 16.4 shows the production cost for two utilities at different levels of sulfur dioxide emissions. Assume that the government issued 8 marketable pollution permits to each firm. If Firm A contemplates selling a second permit to Firm B, what is Firm A's willingness to accept?
A. $2,000 B. $3,000 C. $4,000 D. $5,000
Tim has a toenail clipping business that is a sole proprietorship. If he is sued for a botched pedicure
A) he has limited liability. B) he has separation of ownership and control. C) all of his personal assets are at risk. D) he will be taxed doubly.