If one is inside the production possibilities frontier,
A. more resources are needed to move to the frontier.
B. production of one commodity can be produced but not more of both.
C. production is not on the production contract curve.
D. All of these are true
Answer: C
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President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would
a. have no questions but hundreds of answers. b. have 100 questions and 3,000 answers. c. have 1,000 questions but no answers. d. never produce a winner.
Why is it difficult for policy makers to rely on the theoretical discussion of the money multiplier to target the money supply?
A. The equation of exchange has been proven to be wrong. B. There is no good measure of reserves in the economy. C. The use of quantitative easing has made it impossible to accurately determine the money supply. D. The amount of excess reserves and cash in the system varies.
Which of the following is NOT a function of the interbank part of the foreign exchange market?
A. Provides clearing services for organizations that prefer to use different currencies B. Provides a bank with a continuous stream of information on conditions in the foreign exchange market C. Permits a bank to take on a position in a foreign currency quickly if the bank and its traders want to speculate on exchange-rate movements in the near future D. Provides a bank the means to readjust its own position quickly and at low cost when it separately conducts a large trade with a customer
Suppose that a bank's actual reserves are $5 million, its checkable deposits are $5 million, and its excess reserves are $3 million. The reserve requirement must be:
A. 40 percent. B. 20 percent. C. 10 percent. D. 5 percent.