Suppose the banks in the Federal Reserve System have $100 billion in transactions accounts, the required reserve ratio is 0.10, and there are no excess reserves in the system. If the required reserve ratio is changed to 0.15, the deficiency of reserves would be
A. $20 billion.
B. $5 billion.
C. $10 billion.
D. $15 billion.
Answer: B
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Suppose that Rosie and Betty spend their free time making cakes and cookies
Is it possible for Betty to have an absolute advantage in the production of both cakes and cookies? Is it possible for Betty to have a comparative advantage in the production of both cakes and cookies? Explain.
For each of the following changes, which equilibrium curve (IS, LM, or FE) is shifted? Draw the change in the underlying demand or supply curves (for example, money demand and supply for the LM curve) and show how the equilibrium curve changes
(a) Expected inflation increases. (b) The future marginal productivity of capital increases. (c) Labor supply decreases. (d) Future income declines. (e) There's a temporary beneficial supply shock. (f) The nominal interest rate on money rises.
Governments can eliminate market failure due to an imperfectly competitive market by
A) changing the market structure, for example by eliminating monopoly protection. B) having the government own the monopoly. C) imposing regulations that reduce prices. D) All of the above.
The greater the availability of close substitutes for a product, the greater the price elasticity of demand for that product
a. True b. False