Use the following table to answer the question below. Dave's Production Possibilities SchedulePounds of Green BeansPounds of Corn0160201204080604080 0Dave's opportunity cost of producing 1 pound of corn is ________ pound(s) of green beans.
A. 1
B. 4
C. 1/2
D. 2
Answer: C
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Under a floating exchange rate, the exchange rate
A) is determined by the interaction of supply of the currency and demand for the currency. B) is controlled by central bank intervention. C) is pegged against the euro. D) will change whenever the price of gold changes.
If the Fed’s monetary policy causes a substantial increase in interest rates, what is the most likely impact on velocity?
A. Velocity will decrease. B. Velocity will increase. C. Velocity will remain constant. D. Velocity is unrelated to interest rates.
The risk-free rate is usually approximated by interest rates on U.S. government debt, because the US government:
A. backs all loans secured with that rate. B. sets all policy concerning interest rates. C. is considered extremely unlikely to default. D. will never default on a loan that it makes.
Assuming all excess reserves are loaned out, currency holdings by the public are zero, and a reserve ratio of 2 percent, an initial deposit of $500 will lead to a total increase in deposits of:
A. $250. B. $5,000. C. $25,000. D. $50,000.