Refer to Table 9-3. If the required reserve ratio is 10%, what is the amount of excess reserves held by Alpha-Beta Bank?
A) $25 million
B) $40 million
C) $60 million
D) $75 million
Ans: B) $40 million
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Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?
A. Because sometimes the market does not function well. B. Because opportunity costs are different for different goods. C. Because there are trade-offs involved in any decision. D. Because of existence of efficient markets.
When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?
What will be an ideal response?
Firms in a small economy planned that inventories would grow over the past year by $500,000. Over that year, inventories did grow by exactly $500,000. This implies that
A) aggregate expenditure that year was equal to GDP that year. B) there was an unplanned increase in inventories that year. C) aggregate expenditure that year was greater than GDP that year. D) there was an unplanned decrease in inventories that year.
Intermediaries, known as middlemen, specialize in
A) reducing transaction costs. B) negotiating high prices for sellers. C) negotiating low prices for buyers. D) encouraging consumers to buy goods on credit, rather than with cash.