Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve raises the required reserve ratio to 12 percent, then the bank will now have excess reserves of
A) $12,000. B) $0. C) -$2,000. D) -$12,000.
C
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The difference between the cost of production on a piece of land less the cost of production on marginal land is called
A. usury. B. profit. C. rent. D. interest.
The market will overproduce goods that have external costs because
A. Producers cannot keep these goods from consumers who do not pay, so they have to produce greater amounts. B. Producers experience higher costs than society. C. Producers experience lower costs than society. D. The government is not able to produce these goods.
In the short run, an increase in the price level induces firms to expand production because
A) they can increase profits by increasing maintenance costs. B) higher prices allow firms to hire more inputs by offering higher prices for inputs, which increases productivity and profits. C) each firm must keep its production level up to the level of its rivals, and some firms will expand production as the price level increases. D) prices of inputs are held constant, so the higher prices for firms' products imply that it is profitable to expand production.
Which of the following terms describes the process in which the exchange rate equalizes the prices of internationally traded goods across countries?
a. purchasing power parity b. exchange c. profiteering d. arbitrage