If a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has total reserves of
A) $16,000.
B) $20,000.
C) $26,000.
D) $36,000.
D
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When the demand for money increases,
a. The money supply must rise if the Fed is targeting interest rates.. b. The money supply must fall if the Fed is targeting interest rates.. c. Interest rates must rise if the Fed is targeting the money supply. d. Both a. and c. are correct.
An increase in deductions, exemptions, and credits in the tax code will
A. Induce economic activity to go underground. B. Reduce the tax base. C. Allow lower rates to raise the same tax revenues. D. Increase the marginal tax rate.
The cost of not being able to extract and sell a nonrenewable resource in the future (because it is being extracted in the present) is known by natural resource economists as the:
A. extraction cost. B. future cost. C. conservation cost. D. user cost.
Using Figure 8.5, if the equilibrium price level is P1, then aggregate demand is
A. AD2, and the equilibrium output level is Q2. B. AD2, and the equilibrium output level is Q1. C. AD1, and the equilibrium output level is Q2. D. AD1, and the equilibrium output level is Q3.