Assume the reserve requirement is 10 percent. First National Bank has vault cash and deposits with the Fed of $40 million, loans and securities of $360 million, and demand deposits of $400 million. First National:
a. is not in a position to extend additional loans
b. could extend a maximum of $10 million of additional loans.
c. could extend a maximum of $20 million of additional loans.
d. could extend a maximum of $40 million of additional loans.
a
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A firm's demand curve for labor shifts when the
a. price of its output changes. b. wage rate changes. c. number of available workers changes. d. All of the above are correct.
Speculators play an important role in a system of floating exchange rates because
a. to make a profit, they must buy a currency when its value is low and sell it when its value is high. b. their purchases and sales lead to wild gyrations in exchange rates and thus increase instability. c. they place additional risks on businesses that need to purchase and sell foreign currency. d. All of the above are correct.