A bank with excess reserves
A) cannot make new loans.
B) must make new loans.
C) may choose to make new loans equal to the amount of excess reserves.
D) can lend an amount equal to the amount of excess reserves multiplied by the inverse of the required reserve ratio.
C
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Suppose an excise tax is imposed on two products X and Y, both of which have identical supply elasticities. The demand for good X is highly elastic, while the demand for good Y is highly inelastic. The deadweight loss (or excess burden) will be
a. equal in both cases. b. larger for good X than good Y. c. larger for good Y than good X. d. zero in both cases.
Describe the type of international monetary system that is currently in use. What advantages do proponents of this type of system cite in support of its use? What disadvantages do its opponents cite?