Maximum possible deposit expansion will occur when:
A) Excess reserves equal zero, and banks can make no further loans.
B) All of the initial increase in reserves have been converted into excess reserves.
C) The amount of deposit expansion can be supported by a level of required reserves equal to the initial increase in reserves
a. C only
B. B only
C. A, B and C
D. A and C
E. A only
Answer: B. B only
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Refer to Figure 7-4. Suppose the U.S. government imposes a $0.25 per pound tariff on rice imports. Figure 7-4 shows the demand and supply curves for rice and the impact of this tariff. Use the figure to answer questions a-i
a. Following the imposition of the tariff, what is the price that domestic consumers must now pay and what is the quantity purchased? b. Calculate the value of consumer surplus with the tariff in place. c. What is the quantity supplied by domestic rice growers with the tariff in place? d. Calculate the value of producer surplus received by U.S. rice growers with the tariff in place. e. What is the quantity of rice imported with the tariff in place? f. What is the amount of tariff revenue collected by the government? g. The tariff has reduced consumer surplus. Calculate the loss in consumer surplus due to the tariff. h. What portion of the consumer surplus loss is redistributed to domestic producers? To the government? i. Calculate the deadweight loss due to the tariff.