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.
b
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The main reason a monopolist can earn long-run economic profit, whereas a perfectly competitive firm cannot, is that
a. monopolists operate under economies of scale b. perfectly competitive firms have opportunity costs c. demand for the monopolist's output is inelastic d. demand for the monopolist's output is elastic e. there are no barriers to entry in perfect competition
The Sultan of Brunei, one of the world's richest people, does not face the problem of scarcity
a. True b. False
Unemployment that occurs when there are not enough jobs for the number of people in the labor force is referred to as:
A. Frictional unemployment. B. Structural unemployment. C. Cyclical unemployment. D. Seasonal unemployment.
Classical economists and modern monetarists agree that the best way to examine the economy is through the use of
A) aggregate supply and demand. B) the multiplier. C) the quantity theory. D) the GNP account.