A bank creates money when it
a. gets new demand deposits that the depositor formerly held as cash
b. has a loan paid off, which creates excess reserves for the bank
c. makes a loan from its excess reserves
d. holds back excess reserves because of an increase in the legal reserve requirement
e. gets more excess reserves because of a decrease in the legal reserve requirement
C
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The population of a small town is 5,000. There are 4,000 people in the labor force, and 3,000 people are employed. The unemployment rate equals
A) 25 percent. B) 60 percent. C) 75 percent. D) an undetermined amount given the lack of information.
In the above figure, suppose the economy is initially at point A. People come to expect the future U.S. exchange rate to be higher. As a result there is a change from point A to a point such as ________
A) point B B) point C C) point D D) point E
In the above table, what is the minimum price that producers must be offered to produce the 200th brownie?
A) 0 B) 20¢ C) 60¢ D) 80¢
Suppose economic conditions call for a tax increase but Congress does not implement this measure because an election is approaching. This is an example of which of the real-world problems associated with fiscal policy?
A. Time lags. B. Pork barrel politics. C. Crowding out. D. Balancing the budget on the backs of the poor.