If the Central Bank of Macroland puts an additional 1,000 dollars of currency into the economy, the public deposits all currency into the banking system, and banks have a desired reserve/deposit ratio of 0.10, then the banks will eventually make new loans totaling ________ and the money supply will increase by ________.
A. $9,000; $9,000
B. $9,000; $10,000
C. $1,000; $1,000
D. $1,000; $9,000
Answer: B
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If the quantity of money increases, the
A) price level rises and the AD curve does not shift. B) AD curve shifts leftward and aggregate demand decreases. C) AD curve does not shift and there is a movement upward along the curve. D) AD curve shifts rightward and aggregate demand increases.
Suppose a perfectly competitive firm is in long-run equilibrium and there is a decrease in demand
Suppose also that the firm operates in an industry in which the prices of productive inputs vary with the level of output, increasing when output increases and decreasing when output decreases. Which of the following will occur at the new long-run equilibrium? A) Price will be lower than it was at the initial long-run equilibrium. B) Price will be the same as it was at the initial long-run equilibrium. C) Price will be higher than it was at the initial long-run equilibrium. D) The industry supply function will shift to the right.
Suppose that the dollar-yen spot exchange rate is $0.05/¥ and the 90-day forward exchange rate is $0.06/¥. Assuming that covered interest parity holds, use the exact covered interest differential equation to determine whether Japanese interest rates are higher or lower than U.S. interest rates.
What will be an ideal response?
Which is the most accurate statement?
A. There is basically no real difference between shutting down and going out of business. B. One big difference between shutting down and going out of business is that after you've shut down you're still paying bills, but when you've gone out of business, there are no more bills to pay. C. When you shut down you must still pay your variable costs, but when you go out of business you have no costs at all. D. Shutting down is a long run option, while going out of business is a short run option.