When the required reserve ratio is lowered,
A. increases, and the amount of excess reserves increases in the banking system.
B. decreases, and the amount of excess reserves increases in the banking system.
C. decreases, and the amount of excess reserves decreases in the banking system.
D. increases, and the amount of excess reserves decreases in the banking system.
Answer: A
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Which of the following statements is FALSE?
A) Both monetary and interest rate targets cannot be pursued simultaneously. B) A reduction in the required reserve ratio increases the money supply and pushes down the equilibrium interest rate. C) An open market sale decreases the money supply and pushes up the equilibrium interest rate. D) An open market purchase reduces the money supply and pushes down the equilibrium interest rate.
Customers are most likely buying from a natural monopoly when they purchase
A) aspirin from a generic drug company. B) a laptop computer from Sony. C) a glass of water from the local water company. D) all of the above.
Average cost equals
A. change in total cost/change in quantity. B. total cost/quantity. C. total cost ? total variable cost. D. total cost ? total fixed cost.
Suppose the price of good X falls. As a result, the quantity demanded for good X increases for a particular consumer. For this consumer, the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X. We can infer that X is a(n)
a. normal good. b. inferior good. c. Giffen good. d. luxury good.