According to the interest rate effect, a decrease in the price level will
A) decrease the real value of money balances, which causes total planned real expenditures to increase.
B) cause interest rates to fall, which generates an increase in borrowing, so that total planned real expenditures increase.
C) lead to a decrease in net exports, which causes total planned real expenditures to decrease.
D) increase the real value of money balances, which causes interest rates to increase, thereby reducing total planned expenditures.
B
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If the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the excess reserves-checkable deposit ratio is
A) 0.001. B) 0.10. C) 0.01. D) 0.05.
Railroads have received significant attention from regulators because
a. railroads enjoy significant economies of scale. b. conditions in the railroad industry are conducive to destructive competition. c. regulators would like to ensure universal service to all potential railroad customers. d. All of the above are correct.
The phrase "leakages equal injections" means:
a. that money lost buying imports equals the money injected from people in foreign countries buying our exports. b. that government must purchase surplus grain and other agricultural commodities to inject enough income into the farm economy to make up for leakages due to floods and other natural disasters. c. that aggregate income arising from the production of goods and services equals the aggregate expenditures on that production. d. that total consumption of households equals total investment of the firms.
An oligopoly is a market where there are a handful of dominant firms. A type of oligopoly where there are only two firms is a duopoly.
Indicate whether the statement is true or false