If the Fed lends to member banks, what happens to reserves and the money supply?
a. Reserves increase and the money supply decreases.
b. Both increase.
c. Reserves decrease and the money supply increases.
d. Both decrease.
b
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The total producer surplus in the entire market is given by the:
A) product of the individual seller's surplus. B) sum of all the individual sellers' producer surplus. C) area between the market supply curve and the market demand curve. D) area between the market demand curve and the price line.
If the elasticity of demand for mothballs is 0.50, then moving along the demand for mothballs:
a. A 20% rise in the price of mothballs will lead to a 10% fall in the quantity of mothballs demanded. b. A 10% rise in the price of mothballs will lead to a 20% fall in the quantity of mothballs demanded. c. A 20% rise in the price of mothballs will lead to a 10% rise in the quantity of mothballs demanded. d. A 10% rise in the price of mothballs will lead to a 20% rise in the quantity of mothballs demanded.
In practice, regulatory boards try to set the price of a natural monopoly so that price covers a normal return on capital investment. As a result:
A. there is an incentive to use more equipment. B. the price of equipment should decrease. C. there is an incentive to use less equipment. D. the incentive to use equipment stays the same.
Suppose George's income is $10,000 and he pays a tax of $1,000, but Laura's income is $50,000 and she pays a tax of $4,000. Such a tax is:
A. regressive. B. progressive. C. proportional. D. flat.