The reserve ratio is 20 percent. A check for $1 million is deposited in Bank A, written on an account from Bank B. After the check clears what are the new excess reserves at Bank A, and by how much does the money supply change if all banks make loans so that they have zero excess reserves?
A. $200,000; $800,000
B. $800,000; 0
C. $800,000; $800,000
D. $200,000; $1 million
Answer: B
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The invisible hand suggests that:
A) individuals working for self-interest will eventually maximize the well-being of society. B) equilibrium in a competitive market is determined independent of demand and supply. C) government intervention is necessary to rectify market imperfections. D) the price mechanism allocates resources only to the people with high income in the country.
For a single-price monopolist to sell one more unit of a good, it must
A) lower the price on just the last unit sold. B) lower the price on all units sold. C) raise the price on just the last unit sold. D) raise the price on all units sold.
At points on the short-run aggregate supply curve, but to the right of the long-run aggregate supply curve, resources are:
A. underutilized, making it more likely that the short-run aggregate supply curve will shift down (to the right). B. overutilized, making it more likely that the short-run aggregate supply curve will shift down (to the right). C. overutilized, making it more likely that the short-run aggregate supply curve will shift up (to the left). D. underutilized, making it more likely that the short-run aggregate supply curve will shift up (to the left).
According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if,:
A. the benefits of studying for an additional hour are really high. B. you have time to study for an additional hour. C. the benefits of studying for an additional hour are higher for you than for anyone else in your class. D. the benefits of studying for an additional hour exceed the costs of studying for an additional hour.