Suppose Warren Buffet withdraws $1 million from his checking account at Chase Bank. If the required reserve ratio is 20 percent, what is the maximum change in deposits in the banking system?
A) -$5 million
B) -$4 million
C) -$200,000
D) $1 million
E) $5 million
Answer: A
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New Keynesians hypothesize that
A) fluctuations in output are largely caused by supply shocks. B) the relationship between inflation and unemployment is exploitable in the long run. C) the relationship between inflation and unemployment is exploitable in the short run. D) there is no relationship between inflation and unemployment.
Which of the following forms the largest share of household holdings of financial assets?
A) corporate equities B) bank deposits C) pension funds reserves D) life insurance
What would be the effect on the loanable funds market of an increase in the corporate profits tax? (Assume that the government maintains a balanced budget.)
a. The demand for funds would decrease, lowering the interest rate and leading to lower private investment. b. The demand for funds would increase, raising the interest rate and leading to higher private investment. c. Both the demand and the supply of funds would increase, lowering the interest rate and leading to lower private investment. d. The supply of funds would increase, lowering the interest rate and leading to higher private investment. e. The supply of funds would decrease, raising the interest rate and leading to lower private investment.
The table below shows the number of labor hours required to produce one gallon of wine and one pound of cheese in the United States and France. The United States has a comparative advantage in the production of Labor hours to make:In the United StatesIn France1 gallon of wine4.001.001 pound of cheese1.002.00
A. both goods. B. neither cheese nor wine. C. only cheese. D. only wine.