If the required reserve rate is ten percent and banks do not hold any excess reserves and there are no changes in currency holdings, a $1 million open market purchase by the Fed will result in deposit creation of:
A. $10 million.
B. $90 million.
C. $9 million.
D. $900,000.
Answer: A
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If the price level in the United States increases more slowly than the price level in Canada, we would expect
A) interest rates in the United States to be higher than interest rates in Canada. B) the U.S. dollar to depreciate against the Canadian dollar. C) the Canadian dollar to depreciate against the U.S. dollar. D) U.S. productivity to have increased more slowly than Canadian productivity.
What is the name of the entity, composed of Federal Reserve district bankers, that consults on monetary policy?
A) The Federal Open Market Committee B) The Federal Advisory Council C) The Monetary Policy Council D) The District Bank Committee
Price discrimination that tends to lessen competition is outlawed by the:
a. Sherman Antitrust Act. b. Clayton Act. c. Federal Trade Commission Act. d. Interstate Commerce Act.
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits
a. diseconomies of scale because total cost is rising as output rises. b. constant returns to scale because average total cost is constant as output rises. c. diseconomies of scale because average total cost is rising as output rises. d. economies of scale because average total cost is falling as output rises.