An increase in the deadweight loss (DWL) means
A) an additional reduction in welfare by one group that is not offset by a gain to another group.
B) an additional reduction in welfare by one group that is offset by a gain to another group.
C) an additional increase in welfare by one group that is not offset by a gain to another group.
D) an additional increase in welfare by one group that is offset by a gain to another group.
A
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The slope of the budget line that expresses the tradeoff between risk and return for an asset can be represented by
A) (Rf - Rm)/?m. B) (Rm - Rf)/?m. C) Rm - Rf. D) b.
The banking system currently has $50 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed raises the reserve requirement to 12.5 percent and at the same time sells $10 billion worth of bonds, then by how much does the money supply change?
a. It falls by $20 billion. b. It falls by $110 billion. c. It falls by $180 billion. d. None of the above is correct.