When the Federal Reserve sells a government security to a commercial bank
A. the cash reserves of the commercial bank decrease.
B. the loans of the commercial bank will increase.
C. the balance sheet of the commercial bank is thrown off balance.
D. the net worth of the commercial bank increases.
Answer: A
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If a consumer is relatively insensitive to changes in the price of a good, then the consumer's demand for the good is
A) elastic. B) unit elastic. C) inelastic. D) perfectly elastic.
Suppose an individual's MRS (of steak for beer) is 2:1 . That is, at the current consumption choices he or she is willing to give up 2 beers to get an extra steak. Suppose also that the price of a steak is $1 and a beer is $4 . Then in order to increase utility the individual should:
a. buy more steak and less beer. b. buy more beer and less steak. c. continue with current consumption plans.
If Asian economies suffer a serious economic slump, U.S. net exports will
a. increase and AD will shift outward. b. increase and AD will shift inward. c. decrease and AD will shift inward. d. decrease and AD will shift outward.
It is possible that a firm in a perfectly competitive market earns a negative profit in the long run.
Answer the following statement true (T) or false (F)