Suppose the banks in the Federal Reserve System have $400 million in transactions accounts and the reserve requirement is 0.10. Ceteris paribus, if the reserve requirement is decreased to 0.05, then excess reserves will increase by:
a. $20 million
b. $1 million
c. $2 billion
d. $40 million
Ans: a. $20 million
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The market clearing price is
A) the price which eliminates excess quantity supplied or excess quantity demanded. B) the price which leaves an excess quantity demanded. C) the price which leaves an excess quantity supplied. D) the lowest price at which a positive quantity supplied exists.
Which of the following is NOT a condition that helps enforce a cartel agreement?
A) a small number of firms B) nearly homogeneous products C) easily observable prices D) large variation in input prices
On a Phillips curve diagram, an increase in the rate of inflation, other things being equal, is represented by a(n):
a. upward movement along the Phillips curve. b. downward movement along the Phillips curve. c. upward shift of the Phillips curve. d. downward shift of the Phillips curve.
Which of the following statements best describes how economic growth is represented in the AD/AS diagram?
a. In the AD/AS diagram, long-run economic growth due to productivity increases over time will be represented by a dramatic shift to the right of aggregate supply. b. In the AD/AS diagram, long-run economic growth due to productivity increases over time will be represented by a gradual shift to the right of aggregate supply. c. In the AD/AS diagram, short-run economic growth due to productivity increases over time will be represented by a dramatic shift to the right of aggregate supply. d. In the AD/AS diagram, short-run economic growth due to productivity increases over time will be represented by a gradual shift to the right of aggregate supply.