If the reserve ratio is 10%, and banks do not hold excess reserves, when the Fed purchases $10 million of government bonds, bank reserves
A) increase by $10 million and the money supply could eventually increase by $10 million.
B) decrease by $10 million and the money supply could eventually decrease by $100 million.
C) increase by $10 million and the money supply could eventually increase by $100 million.
D) decrease by $10 million and the money supply could eventually decrease by $10 million
Ans: C) increase by $10 million and the money supply could eventually increase by $100 million.
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Suppose a U.S. government program subsidizes the production of domestic sugar producers and places a tariff (tax) on the importation of sugar from other countries. This program
a. helps the producers of sugar, but increase the opportunity cost of obtaining it. b. promotes the production of goods that consumers value highly relative to cost. c. creates wealth, because the government is providing the subsidies and imposing the tariffs. d. will reduce the opportunity cost of obtaining sugar and therefore lead to lower sugar prices.
Ethics is about making good decisions. Sometimes it is hard to see what economics has to do with ethics until you remember that economics is often defined as the:
A. science of choice. B. study of production techniques. C. key branch of theology. D. study of market failures.
Over the last three decades the "college premium" has ________ because of ________.
A. increased; technological advances B. decreased; technological advances C. increased; racial and gender discrimination D. decreased; laws that prohibit discrimination
During the 1990s, Japan experienced periods of deflation and very low nominal interest rates, approaching zero percent. Why would lenders of money agree to a nominal interest rate of almost zero?
What will be an ideal response?