A reduction in the required reserve ratio has the instant effect of:
a. Increasing the monetary base.
b. Increasing total bank reserves
c. Increasing excess reserves.
d. Increasing bank shareholders' equity.
e. Decreasing bank shareholders' equity.
.C
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Moving from left to right, a U-shaped curve starts with a
A) negative slope, reaches a minimum, then ends with a positive slope. B) negative slope, reaches a minimum, then ends with a negative slope. C) positive slope, reaches a maximum, then ends with a negative slope. D) negative slope, reaches a maximum, then ends with a positive slope. E) positive slope, reaches a minimum, then ends with a negative slope.
The process where financial intermediaries create and sell low-risk assets and use the proceeds to purchase riskier assets is known as
A) risk sharing. B) risk aversion. C) risk neutrality. D) risk selling.
If a market economy was in a recession, which of the following would help direct it back toward the full employment rate of output?
a. an increase in the rate of inflation b. lower resource prices and lower real interest rates c. higher resource prices and higher real interest rates d. a decrease in the natural rate of unemployment
Monoploy
What will be an ideal response?