For the most part, prior to 2008, banks typically held:
A. excess reserves equal to approximately 100% of deposits.
B. excess reserves equal to less than 1% of deposits.
C. excess reserves equal to between 10 and 20% of deposits.
D. absolutely no excess reserves.
Ans: B. excess reserves equal to less than 1% of deposits.
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Indicate whether the statement is true or false
Reducing direct costs will
A) increase economic profit. B) decrease economic profit. C) leave economic profit unchanged. D) may or may not affect economic profit.
In general, an externality is created when
A) people are affected (other than by price) by a transaction which they were not part of. B) firms produce a product of low quality and consumers don't like it. C) firms have to pay for polluting the environment. D) the government subsidizes education.
The yield curve shows
A. the yields on stocks of different maturities. B. the yields on bonds with differing default risk. C. the interest rates on bonds of different maturities. D. the yields on stocks with differing default risk.