A commercial bank has no excess reserves until a depositor places $2,000 in cash in the bank. The reserve ratio is 10%. The bank then lends $1,500 to a borrower. As a consequence of these transactions the bank's excess reserves are:
A. Not affected
B. Increased by $200
C. Increased by $300
D. Increased by $500
C. Increased by $300
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If the wage falls, we know for sure that the firm will produce more in the long run but we cannot be sure whether it will use more or less capital.
Answer the following statement true (T) or false (F)
Net capital outflows ________
A) are also known as net foreign investment B) are positive if saving is greater than investment C) are also known as the trade balance D) all of the above E) none of the above
Suppose that a large dairy farmer is able to raise the market price of milk by withholding milk supply from the market. In this instance,
a. the milk market is perfectly competitive b. buyers will decrease their demand for milk c. buyers will increase their demand for milk d. the milk market is imperfectly competitive e. the milk market will collapse in the long run
Why do major-league baseball players get paid more than minor-league players?
a. Major-league players are better athletes. b. The higher wage reflects a compensating differential. c. Playing in the major leagues in more pleasant then playing in the minor leagues. d. The higher wage is often due to educational discrepancies.