Best National Bank operates with a 20 percent required reserve ratio. One day a depositor withdraws $500 from his or her checking account at this bank. As a result, the bank's excess reserves:
A. fall by $500.
B. fall by $400.
C. rise by $100.
D. rise by $500.
Answer: A
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The Equivalent Variation resulting from a quota is best defined as
A) the amount a consumer would pay to have the quota removed. B) the amount the consumer would need to voluntarily accept the quota. C) the amount a consumer would pay for the quantity specified by the quota. D) the loss in utility resulting from the quota.
According to the innovation theory of profit, above-normal profits are necessary to compensate the owners of the firm for the risk they assume when making their investments
a. true b. false
Financial disintermediation occurs when:
a. Individuals withdraw funds from financial intermediaries and invest them elsewhere. b. Businesses no longer issue stock. c. Individuals no longer trade securities in the secondary market. d. None of the above. e. Businesses no longer borrow directly in the bond market.
For a given level of inflation, if a resolution of international disputes leads to a cutback in government military spending, then the ________ shifts ________.
A. short-run aggregate supply line; downward B. aggregate demand curve; left C. short-run aggregate supply line; upward D. aggregate demand curve; right