In considering the relationships between price and quantity demanded, ceteris paribus directs the economist to assume that
A) price increases affect quantity. B) quantity increases affect prices.
C) either price nor quantity affect demand. D) all other variables remain unchanged.
D
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If the desired reserve ratio is 3 percent and deposits totaled $575 billion, banks would hold
A) $534.75 in reserves. B) $17.25 billion in excess reserves. C) $1,725 billion in currency. D) $17.25 billion in reserves.
Suppose that you work for the Federal Reserve. Unemployment is starting to climb and one of your colleagues has presented an argument in favor of increasing the money supply to stimulating spending and reduce unemployment. Present a counterargument of why reducing unemployment could be detrimental to the economy.
What will be an ideal response?
A publicly traded firm has 4 million shares of stock outstanding, with a current share price of $50. The value of its plant and equipment is $250 million. Its profit annually is $50 million. The average rate of return on existing capital is
a) 5% b) 10% c) 15% d) 20% e) 25%
If the economy experiences an inflationary gap, a contractionary monetary policy will
A) increase real GDP and increase the price level. B) increase real GDP and decrease the price level. C) decrease real GDP and increase the price level. D) decrease real GDP and decrease the price level.