Assume that the reserve—deposit ratio is 0.4. The Federal Reserve carries out open-market operations, purchasing $1,000,000 worth of bonds from banks. This action increased the money supply by $1,750,000. What is the reserve—deposit ratio?
A) 0.2
B) 0.3
C) 0.4
D) 0.5
C
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It is generally agreed that
A) the financial system would be more efficient if intermediaries were eliminated. B) small- and medium-sized firms benefit by the actions of intermediaries. C) the addition of intermediaries adds to transactions costs. D) intermediaries should not seek to profit from reducing transactions costs.
Resale is difficult when
A) the good is light-weight. B) the good is expensive. C) transaction costs are high. D) transaction costs are negligible.
Tom is an organic gardener. For several years, he produced only for his own consumption. Last year, he sold his vegetables at a farmer's market. This year, he sold all of his vegetables to a company producing organic vegetable soup. When is the value of Tom's vegetables included in GDP? a. None of his production is included in GDP, since it is considered home production
b. Only when he sells his vegetable at the farmer's market. c. Only when he sells his vegetables to the organic soup company. d. When he sells his vegetables at the farmer's market and when he sells the vegetables to the organic soup company.
Figure 4-11 Refer to . On the Laffer curve shown, which of the following is true?
a. Tax revenue would increase if marginal tax rates were lowered from point C.
b. Tax revenue would decrease if marginal tax rates were lowered from point A.
c. Tax revenues are maximized at a tax rate corresponding to point B.
d. All of the above are true.