Suppose a bank has $5,000,000 in deposits, a required reserve ratio of 20 percent, and total reserves of $1,000,000. Then the bank has excess reserves of
A. $1,000,000.
B. $0.
C. $2,000,000.
D. $500,000.
Answer: B
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The quantity theory of money assumes that the velocity of money:
a. is constant. b. will rise if the money supply rises and fall if the money supply falls. c. will rise if the money supply rises, but it will not change if the money supply falls. d. will fall if the money supply rises, and it will rise if the money supply falls. e. will fall if the money supply rises, but it will not change if the money supply falls.
Figure 8-1
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Given the scatter diagram in Figure 8-1, what is the MPC (your best estimate)?
A. 1/2 B. 1/3 C. 2/3 D. 1
With a tax of zero dollars, equilibrium occurs at
Suppose the supply of labor is W – t = 10H, where W is the gross wage, t is the tax (in dollars), and H is labor hours. The demand for labor is W = 120 – 2H. a) H = 10, W = 100 b) H = 9, W = 90 c) H = 8, W = 80 d) H = 7, W = 70 e) H = 6, W = 60
Refer to the information provided in Figure 9.2 below to answer the question(s) that follow.
Figure 9.2Refer to Figure 9.2. Suppose demand for wheat is initially D2. If the price of rice (a substitute for wheat) rises, then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat and individual profit-maximizing firms will produce ________ bushels of wheat.
A. D1; increase; 13 B. D3; increase; 15 C. D3; decrease; 10 D. D1; decrease; 0