If a bank receives a new transaction deposit of $10,000 and the reserve ratio is 5 percent, then the bank could expand its loans by as much as
A. $500.
B. $200,000
C. $9,500.
D. $10,000.
Answer: C
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A negative supply shock in the short run causes
A) unemployment to fall. B) the aggregate supply curve to shift to the left. C) equilibrium real GDP to rise. D) the price level to fall.
Pension funds ________
A) acquire access to funds by accepting deposits then using these monies to lend to households and firms B) raise funds by selling commercial paper then lend these funds to consumers C) are a special type of mutual fund D) acquire access to monies through the payment of premiums by employees
Refer to Scenario 9.3 below to answer the question(s) that follow. SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. Refer to Scenario 9.3. If the restaurant were to shut down, losses per week would be
A. $1,000. B. $1,600. C. $2,000. D. $3,600.
Which of the following is a limitation of using arithmetic averages to calculate growth rates?
A) Arithmetic averages do not capture the exponential nature of growth and thus are not apt for long-run prediction. B) Arithmetic averages cannot be used in case of negative growth. C) Arithmetic averages are difficult to calculate. D) The calculation of growth using arithmetic averages requires more data than other methods.