A single bank with $20,000 of reserves and a reserve ratio of 5 percent could support total transactions account balances of at most
A. $1,000.
B. $100,000.
C. $20,000.
D. $400,000.
Answer: D
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Entrepreneurs are people who:
A. entertain the workers. B. engage exclusively in business travel. C. create new economic enterprises. D. run businesses on a day-to-day basis.
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Suppose the natural rate of unemployment is 5 percent. If the actual unemployment rate is 4 percent, then the cyclical unemployment rate is
A) -1 percent. B) 1 percent. C) 9 percent. D) 0 percent as cyclical unemployment cannot be less than zero.
Firms in monopolistic competition can achieve product differentiation by
A) expanding plant size. B) exploiting economies of scale in production. C) advertising special characteristics. D) setting the price equal to average revenue.