Reserve requirements are changed infrequently because
A. Banks can determine the amount of reserves they wish to hold regardless of the reserve requirement
B. Banks cannot usually meet their reserve requirements so the Fed does not monitor it
C. Banks set long-term policy decisions, loan decisions, and deposit decisions based on the reserve requirement
Ans: C. Banks set long-term policy decisions, loan decisions, and deposit decisions based on the reserve requirement
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The production of an industrial good in a plant emits harmful gases that cause breathing difficulty. Which of the following will happen if the government imposes a Pigouvian tax on the plant?
A) Marginal external cost will increase. B) Marginal private cost will fall. C) The quantity supplied of the good will decrease. D) The demand for the good will increase.
Exceptionally favorable growing conditions in the vineyards of Napa Valley would cause a(n)
a. increase in the demand for wine, increasing price. b. increase in the supply of wine, decreasing price. c. decrease in the demand for wine, decreasing price. d. decrease in the supply of wine, increasing price.