Which of the following is true of the money multiplier?
a. The higher the value of the required reserve ratio, the higher the value of the money multiplier.
b. The higher the value of the required reserve ratio, the lower the value of the money multiplier.
c. The higher the value of deposits in banks, the lower the value of the money multiplier
d. The higher the value of deposits in banks, the higher the value of the money multiplier.
b
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Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out business. Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in lost production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $120 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reduction in cash holdings will be invested in government bonds earning 7%, then how much money should Jan's hold?
A. $4,000 B. $8,000 C. $10,000 D. $6,000
In the above figure, if we start at AD1 and SRAS1, and the money supply increases unexpectedly, what would be the short-run equilibrium even with rational expectations?
A) P1 B) E2 C) E3 D) E1
One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify
Which of the following is a second reason? A) Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers. B) The costs that tariffs and quotas impose on consumers are large in total but relatively small per person. C) The benefits from free trade are less than the costs. D) People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote.
If a nation has a comparative disadvantage in the production of some commodity, a. it can gain from international trade in that commodity only if it has an absolute advantage in that commodity. b. it can still gain from international trade in that commodity, by getting it at a lower opportunity cost than if they produced it domestically. c. it cannot gain from international trade in the
commodity. d. it cannot gain from international trade unless it has an absolute advantage in every other commodity.