If the Fed decreases the reserve requirement, it will likely:
A. decrease the amount of excess reserves which will eventually decrease the money supply.
B. increase the amount of excess reserves which will eventually increase the money supply.
C. increase the amount of excess reserves which will eventually decrease the money supply.
D. decrease the amount of excess reserves, which will eventually increase the money supply.
Answer: B
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Which one of the following is a function of the Federal Reserve System?
A) providing the economy with currency B) serving as a lender of last resort C) providing a system for check clearing D) all of the above
An efficiency wage is designed to
A) keep the minimum wage from falling. B) keep the minimum wage from rising. C) to induce more employment. D) decrease the need for workers to search for jobs. E) induce more work effort.
A plant is located at the cost-minimizing location when the marginal benefit of moving closer to the inputs is ________ the marginal cost.
A) greater than B) exactly double C) equal to D) less than
Ethan enjoys buying books and going to the movies. He has income of $150 to spend on these two goods each month. The price of a book is $15 and the price of going to the movies is also $15. He currently consumes four books and six movies a month. If the price of a book drops to $10, the substitution effect would predict:
A. Ethan would consume more of each good. B. Ethan would consume less of each good. C. Ethan would consume more books and fewer movies. D. Ethan would consume fewer books and more movies.