Refer to the given data. Suppose the Fed wants to reduce the money supply by $200 billion to drive up interest rates and dampen inflation. To accomplish this, it could increase the reserve requirement from 20 percent to:
Answer the question on the basis of the following consolidated balance sheet of the
commercial banking system. Assume that the reserve requirement is 20 percent. All figures
are in billions and each question should be answered independently of changes specified in all
preceding ones.
A. 22 percent.
B. 25 percent.
C. 30 percent.
D. 33 percent.
B. 25 percent.
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Countries with small amounts of capital per worker tend to have ________ levels of real GDP per person and ________ levels of average labor productivity.
A. high; high B. low; average C. low; low D. high; low
A homeowner making a mortgage payment is paying
A) a sunk cost which is consequently not a genuine cost at all. B) the cost of borrowing to purchase the house. C) the cost of constructing the house. D) the cost of purchasing the house. E) the cost of retaining ownership of the house.
A(n) ________ in aggregate demand will result from a decrease in ________
A) decrease; inflation B) increase; taxes C) increase; the budget deficit D) increase; government purchases
If a perfectly competitive firm with a known demand and random marginal cost is producing at a level in which the marginal cost is less than the expected marginal cost and the marginal revenue, which of the following is true?
A) To maximize expected profit, the firm should decrease production. B) To maximize expected profit, the firm should decrease production by one -half. C) The firm is maximizing expected profit. D) To maximize expected profit, the firm should increase production.