In the simple deposit expansion model, if the required reserve ratio is 10 percent and the Fed increases reserves by $100, checkable deposits can potentially expand by
A) $100.
B) $250.
C) $500.
D) $1,000.
D
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The cost of producing cigarettes in the United States has increased and at the same time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette market?
A) Both the supply and demand curves have shifted to the left. As a result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price. B) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. C) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. D) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.
In the Classical model, an increase in aggregate demand leads to __________ real GDP and __________ price level
A) an unchanged; an unchanged B) a rising; an unchanged C) a rising; a rising D) an unchanged; a rising
Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate
a. True b. False Indicate whether the statement is true or false
If the interest rate rises, a profit-maximizing firm will tend to
a. invest in more projects (such as new plants) with payoffs in the future. b. invest in fewer projects with payoffs in the future. c. increase both current output and future output. d. reduce both current output and future output.