A bank with $200 million in deposits has $15 million of cash in the bank and $10 million in deposits with the Fed. Its total reserves equal
A. $25 million.
B. $10 million.
C. $225 million.
D. $15 million.
Answer: A
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The theory that monetary policy conducted on a discretionary, day-by-day basis leads to poor long-run outcomes is referred to as the
A) adverse selection problem. B) moral hazard problem. C) time-inconsistency problem. D) nominal-anchor problem.
Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they give her blisters. From the economist's perspective, was Sara behaving rationally when she bought those shoes?
A) No. If any of a person's decisions have poor results, that person is irrational. B) Yes, as long as Sara didn't intentionally purchase blister-causing shoes. C) No. The rationality assumption states that rational people never make mistakes. D) It's not clear because psychology, not economics, deals with the rationality assumption.
Which of the following countries would have the most difficulty raising its level of average educational attainment?
a. Canada b. Italy c. India d. Sudan
When an economy's government goes from running a budget deficit to running a budget surplus, the economy's long-run growth prospects are improved
a. True b. False Indicate whether the statement is true or false