If a bank keeps some of its excess reserves, the actual money multiplier
a. increases
b. stays the same
c. goes to zero
d. decreases
e. increases, then decreases
D
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Moral hazard problems arise when
A) lenders have difficulty in distinguishing between good and lemon firms. B) when a downturn in economic activity makes repaying loans difficult for borrowers. C) borrowers have an incentive to act in ways that do not reflect the lender's interests. D) borrowers default on loans.
Budget lines: a. are typically positively sloped
b. are typically negatively sloped. c. often have the same slope as indifference curves. d. are generally horizontal.
The calculated value of a normal good's price elasticity is less than zero
Indicate whether the statement is true or false
Reserve requirements are regulations concerning
a. the amount of deposits banks are allowed to accept. b. the amount of reserves banks must hold against deposits. c. the total amount of loans banks are allowed to make. d. the interest rate at which banks can borrow from the Fed. e. the number of open market transactions the Fed can perform.