When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead, then, in the bank's final balance sheet,
A) the assets at the bank increase by $800,000.
B) the liabilities of the bank increase by $1,000,000.
C) the liabilities of the bank increase by $800,000.
D) reserves increase by $160,000.
Answer: B
Economics
- If the Federal Reserve creates new money to finance the government's deficit, then it is monetizing the deficit.(True/False)
- If the current price is above equilibrium price in a competitive market, we should expect a shortage of the product.(True/False)
- Any time the government sets an artificially low price for a product, it increases the possibility of a shortage of that product.(True/False)
- In cost-push inflation, prices go up because of higher cost of production.(True/False)
- When the Federal Reserve lowers the reserve requirement, the amount of money in circulation should tend to decrease.(True/False)
- A study of United States imports and exports shows that most of the United States' negative balance of trade is caused by imports of oil and automobiles.(True/False)
- "Dumping" is selling products to foreign countries for less than the price charged.(True/False)
- U.S. businesses were the first to start the trend toward multinational corporations.(True/False)
- Import quotas are no longer permitted under GATT.(True/False)
- Recession is a lesser form of inflation.(True/False)
- Prices help to determine the opportunity cost of a purchase.(True/False)
- The equilibrium price is where supply and demand curves intersect.(True/False)
- More than half of every sales dollar goes to profits.(True/False)
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- Prices are an ineffective way to deal with scarcity.(True/False)
- The supply curve slopes downward from left to right.(True/False)
- A flexible exchange rate system is a system in which the laws of supply and demand are allowed to set the prices, or exchange rates, among types of money.(True/False)
- Environmental regulation can cause productivity measure to fall(True/False)
- Unlike other major energy sources, the supply of fossil fuels such as petroleum, natural gas, and coal are unlimited (True/False)
- The demand curve for a firm in a competitive environment is_______.