If the Fed buys a $100,000 government security from a bank when the desired reserve ratio is 20 percent and the currency drain ratio is 5 percent, the bank can loan a maximum of
A) $75,000. B) $85,000. C) $95,000. D) $80,000. E) $100,000.
D
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In May, Jones thinks the upcoming summer's corn crop will be much lower, and the November corn price will be much higher than most people expect. To act on his belief, Jones would
A) sell November corn futures. B) buy November corn futures. C) simultaneously buy and sell November corn futures. D) profit only by waiting to see if his original conclusion was correct.
Using the above figure, the perfectly competitive firm should shut down if the market price is below
A) P1. B) P2. C) P3. D) P4.
Gross domestic product (GDP) is a poor measure of social well-being because:
a. the value of leisure time is included in GDP accounting. b. the revenue earned through exports is ignored c. each dollar of government spending is valued at less than one-half of private spending. d. consumer spending is more important than business spending and should be considered more valuable. e. it values products at their market prices but ignores services produced.
Which best describes the "invisible hand" concept?
a. Sufficiently detailed central direction of an economy will maximize the public's best interests b. The desires of producers and resource suppliers to further their own self-interest will automatically promote the social interest c. The market system works best when resources are highly substitutable d. The problem of scarcity can best be overcome in a system