A bank has excess reserves of $4,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess reserves will be
A) -$5,000.
B) -$1,000.
C) $1,000.
D) $5,000.
B
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Which market model assumes the least number of firms in an industry?
A. Monopolistic competition B. Pure competition C. Pure monopoly D. Oligopoly
Which of the following relationships is likely to exhibit negative correlation?
A) The relationship between inflation in the U.S. and traffic congestion in China B) The relationship between amount saved with a bank and the interest earned C) The relationship between the amount of precipitation in a year and the number of umbrellas sold D) The relationship between level of professional training and unemployment
The quantity theory of money implies that over the long run, the inflation rate will ________
A) equal the nominal interest rate B) equal the growth rate of M2 minus the growth rate of real output C) equal the growth rate of M2 plus the growth rate of real output D) equal the velocity of money
Assume the production technology changes for a good that is currently produced in a perfectly competitive market
In particular, the new technology is such that the marginal costs of production for a single firm decline over the entire range of the demand curve for the good in question. How would this affect the number of firms that operate in this market? Explain.