Which of the following compose the reserves of a commercial bank?
a. demand deposits and time deposits
b. vault cash and deposits of the bank with the Federal Reserve
c. U.S. securities and stock equity
d. cash and U.S. securities
B
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Transaction costs are
A) all unnecessary and wasteful costs. B) any nonmonetary costs associated with a transaction. C) not real costs because they make no positive contribution to economic transactions. D) the costs of arranging agreements between demanders and suppliers. E) the opposite of opportunity costs.
Given that the own-price elasticity of demand for a brand of shoes is -2, if the price rises by 8%, what will happen to the quantity of shoes demanded?
a. It will decrease by 16% b. It will increase by 16% c. It will decrease by 1.6% d. It will decrease by 1.6%
Suppose the probability of a near-new car being good is 0.4 while its probability of being a lemon is 0.6 . If risk-neutral consumers are willing to pay $14,000 if the car is in good condition and $8,000 if it is a lemon, a risk averse buyer who knows those probabilities would be willing to pay $10,400 for the car
Indicate whether the statement is true or false
Explain how the relation between the real exchange rate and net exports explains the downward slope of the demand for foreign-currency exchange curve