For a given level of reserves, a decrease in the reserve requirement ratio will
A) decrease legal reserves and decrease the money supply.
B) increase legal reserves and decrease excess reserves
C) decrease legal reserves and increase excess reserves.
D) decrease excess reserves and decrease the money supply.
Ans: C) decrease legal reserves and increase excess reserves.
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The short run is a time period that is
A) equal to a day. B) too short to change the amount of labor hired. C) too short to change the size of the firm's plant. D) long enough to change the size of the firm's plant. E) too short to change the amount of any resource the firm employs.
People often choose to specialize and trade because:
A. it will allow them to enjoy more goods than they can create on their own. B. they can consume a bundle of goods on their production possibilities frontier. C. it always allows them to produce at a point beyond their own production possibilities frontier. D. they can take advantage of another nation’s poor choices.
The size distribution of income
A. Tells how personal income is divided up among households or income classes. B. Reflects the distribution of financial assets. C. Focuses on the distribution of income to different factors of production. D. Is the same thing as the functional distribution of income.
Refer to the above graph. If the production possibilities curve of an economy shifts from AB to CD, it is most likely caused by which of the following factors?
A. A decrease in the price level
B. Allocative efficiency
C. Technological progress
D. Full employment of resources