How much additional money will be created if you deposit a $200 check into your bank, which holds a 10% reserve ratio?
A. $200 will be created since your checking account balance has increased by $200
B. $180 since the bank will keep 10% of your $200 check in reserves and lend the other 90%
C. $2,000 since the money multiplier will be equal to 10 and reserves have increased by $200
D. No money will be created since the $200 check does not represent an increase in reserves
Ans: D. No money will be created since the $200 check does not represent an increase in reserves
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The natural unemployment rate ________
A) is the same from year to year B) is greater than the actual rate of unemployment C) is the unemployment rate when there is no cyclical unemployment D) equals zero
Which of the following statements is correct?
a. The interest rate that is usually reported is the interest rate that has been corrected for inflation. b. The supply of, and demand for, loanable funds depend on the real (rather than nominal) interest rate. c. If the nominal interest rate has decreased and the real interest rate has also decreased, then the inflation rate must have decreased as well. d. All of the above are correct.
If an economy's exports are $600 billion and its imports are $750 billion, its net exports are
A) $1,550 billion B) $150 billion C) -$150 billion D) 1.07.
In a monopolistically competitive market, the seller maximizes profits by
A. setting P = ATC. B. setting price where P = MC. C. setting MC = ATC. D. setting price where MR = MC.