A reserve requirement set by the Federal Reserve is the:
A. maximum ratio of reserves to bank deposits that commercial banks are allowed to maintain.
B. maximum amount of currency banks are allowed to hold in their vaults.
C. minimum ratio of reserves to bank deposits that commercial banks are allowed to maintain.
D. minimum amount of currency banks must hold in their vaults.
Answer: C
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If the demand for one good decreases when the price of another good decreases, the two goods are ________ goods
A) normal B) inferior C) complementary D) substitute
Exhibit 30-5
?
A. underproduces; Q1 B. overproduces; Q2 C. overproduces; Q2 - Q1 D. underproduces; Q2 - Q1
Economists believe that the Consumer Price Index tends to overstate the actual rate of inflation
a. True b. False Indicate whether the statement is true or false
The diagram concerns supply adjustments to an increase in demand (D 1 to D 2 ) in the immediate market period, the short run, and the long run. In the immediate market period, the increase in demand will:
A. have no effect on either equilibrium price or quantity.
B. increase equilibrium price but not equilibrium quantity.
C. increase equilibrium quantity but not equilibrium price.
D. increase both equilibrium price and quantity.