Which of the following statements is correct?
A. A single bank can legally lend an amount equal to its total reserves.
B. When borrowers repay bank loans, the money supply is increased.
C. A bank can only grant loans to customers if it has excess reserves.
D. When borrowers take out bank loans, the money supply is decreased.
Answer: C
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A farmer discovers that the total cost of growing 50 acres of eggplant is $50,000 and that the total cost of growing 51 acres of eggplant is $52,000. The marginal cost of the 51st acre of eggplant is
A) $52,000. B) $50,000. C) $2,000. D) $1,000.
José is putting money for college in a savings account. The bank then makes this money available to business borrowers. In essence:
a) José is supplying loanable funds for business investment. b) José is demanding loanable funds. c) The interest rates that businesses pay are independent of the actions of suppliers of funds, such as José. d) Financial markets are not performing the role of an intermediary.