A bank will want to hold more excess reserves (everything else equal) when A) it expects to have deposit inflows in the near future. B) brokerage commissions on selling bonds increase. C) the cost of selling loans falls. D) the discount rate decreases. ANSWER B
Date: September 10th, 2020
Which of the followings is NOT a current duty of the Board of Governors of the Federal Reserve System? A) setting margin requirements, the fraction of the purchase price of the securities that has to be paid for with cash B) setting the maximum interest rates payable on certain types of time deposits under Regulation […]
Date: September 10th, 2020
The producer price index measures: A) the prices consumers pay for final goods and services. B) the prices firms pay for crude and intermediate materials as well as finished goods. C) the prices the government pays for final goods and services. D) none of the above. ANSWER B
Date: September 10th, 2020
Describe the fractional reserve banking system. What will be an ideal response? ANSWER Banks hold a portion of deposits in required reserves lending out the excess reserves. The loans generated return to the banking system in the form of deposits at which time the process of holding a portion in required reserves and lending […]
Date: September 10th, 2020
The Federal Open Market Committee usually meets ________ times a year. A) four B) six C) eight D) twelve ANSWER C
Date: September 10th, 2020
To claim that a lottery winner who is to receive $1 million per year for twenty years has won $20 million ignores the process of A) face value. B) par value. C) deflation. D) discounting the future. ANSWER D
Date: September 10th, 2020
Assume a perfectly competitive firm is currently producing 5,000 units of output and is earning $15,000 in total revenue. The marginal cost of the 5,000th unit of output is $3. The corresponding average total cost is $3. 50 and total fixed costs equal $1250. Based on this information, should this firm continue to operate in […]
Date: September 10th, 2020
Explain why a firm should continue to operate in the short run so long as market price is greater the the firm’s average variable cost at the profit-maximizing level of output. What will be an ideal response? ANSWER So long as market price is greater than average variable cost at the profit-maximizing level of […]
Date: September 10th, 2020
So long as a firm is enjoying increasing marginal returns, a one unit increase in output will cause marginal costs to ________ and total costs to ________. A) increase; increase B) decrease; increase C) increase; decrease D) decrease; decrease ANSWER B
Date: September 10th, 2020
The preferred habitat theory of the term structure is closely related to the A) expectations theory of the term structure. B) segmented markets theory of the term structure. C) liquidity premium theory of the term structure. D) the inverted yield curve theory of the term structure. ANSWER C
Date: September 10th, 2020
