Among the assets of commercial banks are demand deposits.
Answer the following statement true (T) or false (F)
False
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Assume a closed economy, that taxes are fixed, and the marginal propensity to consume is equal to 0.8. What is the government spending multiplier?
A) 10 B) 5 C) 4 D) 3
If the required reserve ratio is 15 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the M1 money multiplier is
A) 2.5. B) 1.67. C) 2.3. D) 0.651.
A purchase of U.S. government securities by the Fed causes
A) an expansion of the money supply equal to the amount of the securities purchased. B) a contraction of the money supply equal to the amount of the securities purchased. C) an expansion of the money supply of more than the amount of the securities purchased. D) a contraction of the money supply of more than the amount of the securities purchased.
Figure 10-8
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For the perfectly competitive firm in Figure 10-8, what is the long-run price and quantity?
A. P = 4, Q = 150 B. P = 9, Q = 200 C. P = 10, Q = 200 D. P = 5, Q = 150