Suppose a commercial banking system has $240,000 of outstanding checkable deposits and actual reserves of $85,000. If the reserve ratio is 25%, the banking system can expand the supply of money by a maximum of
A. $5,000.
B. $25,000.
C. $75,000.
D. $100,000.
Answer: D
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A firm in monopolistic competition maximizes its profit by ________
A. differentiating its good and producing the quantity at which price equals marginal revenue B. producing the quantity at which marginal revenue equals marginal cost and then adding a markup C. raising its price and producing so that it always has excess capacity D. producing the quantity at which marginal cost equals marginal reve-nue and charging the highest price at which it can sell that quantity
If government spending were to increase we expect that the aggregate demand curve will:
A. shift straight down. B. shift to the right. C. remain unchanged but the economy will move down along the curve to a higher quantity. D. remain unchanged but the economy will move down along the curve to a lower quantity.
Jewelry workers and maintenance workers both get paid $4 an hour. Their supply curves are identical. The demand curve for jewelry workers is more elastic than the demand curve for maintenance workers. An increase in the minimum wage to $5.25 an hour will create
a. greater unemployment among jewelry workers than maintenance workers b. greater unemployment among maintenance workers than jewelry workers c. a shortage of jobs among maintenance workers d. a shortage of jobs among jewelry workers e. a wage differential between the two sets of workers
A decrease in the reserve requirement ________ bank reserves and ________ the money supply
A) increases; increases B) decreases; decreases C) increases; decreases D) decreases; increases