The higher the reserve requirements, the
a. greater the possible expansion of the money supply.
b. less the possible expansion of the money supply.
c. more loans a bank can extend.
d. higher the interest a bank must pay on its checkable deposits.
b. less the possible expansion of the money supply.
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If commercial banks are maintaining a 4 percent reserve/deposit ratio and the Fed raises the required reserve ratio to 6 percent, then banks will ________ their loans based on current deposits, and the money supply will ________.
A. decrease; decrease B. increase; increase C. decrease; increase D. increase; decrease
Four stores have a problem with theft and security is a public good. Let S stand for the number of person-hours of security patrols per week. The marginal benefit of security patrols to each of the stores is given by the formula MB = 200/(1 + S). Patrols cost $25 per hour. What is the socially efficient level of security?
A. 31 person-hours of patrols per week B. 15 person-hours of patrols per week C. 25 person-hours of patrols per week D. 32 person-hours of patrols per week
An increase in domestic output would cause a ________ in net exports and a ________ in the exchange rate
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
Cost-push inflation can be shown on an aggregate supply aggregate demand diagram as
A) a rightward shift of the aggregate supply curve with no change in aggregate demand. B) a rightward shift in the aggregate demand curve with no change in aggregate supply. C) a leftward shift in the aggregate demand curve with no change in aggregate supply. D) a leftward shift in the aggregate supply curve with no change in aggregate demand.