If a bank sells a $1,000 security to the Fed and the required reserve ratio is 20 percent:
a. the bank has $1,000 in additional excess reserves, of which it can lend $800.
b. the bank has $1,000 in additional excess reserves, all of which it can lend out.
c. the bank has lost an asset and must reduce its loans
d. the bank has lost a liability.
e. there is no change in excess reserves, since net assets do not change.
a
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A currency drain is
A) when the Fed buys securities, but it is not when the Fed sells securities. B) when the Fed raises the required reserve ratio. C) an increase in currency held outside banks. D) when the Fed either buys or sells securities. E) when the Fed sells securities, but it is not when the Fed buys securities.
If the interest rate increases from 6 percent to 10 percent per year, each $100 saved will earn
a. $4 per year more than before b. $6 per year more than before c. $10 per year more than before d. $16 per year more than before e. $60 per year more than before
Opportunity cost is best defined as the value of
a. all of the other possible options that the decision maker could have chosen. b. the alternative which the decision maker would choose if more resources were available. c. what is gained from the alternative which is chosen. d. resources that are given up to obtain the alternative that is chosen. e. the next best alternative that the decision forces one to give up.
Costs of production that do not change with the rate of output are:
a) Nonexistent. b) Marginal costs. c) Variable costs. d) Fixed costs.