Give an equation that shows the relationship between excess reserves, maximum checkable-deposit expansion, and the monetary multiplier.
What will be an ideal response?
The maximum deposit expansion = excess reserves times monetary multiplier; or symbolically, D = E times m where D is the maximum potential deposit expansion, E is excess reserves, and m is the monetary multiplier.
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U.S. and Japanese automakers __________ during the automobile VER of the 1980s.
a. both suffered losses b. were locked in a contentious trade war c. both enjoyed higher prices and higher profits d. both felt that the other side had more gains
Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics decreases for many individuals. Suppose it generally takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the equilibrium quantity of university economics professors will
a. increase. b. decrease. c. not change. d. It is not possible to determine what will happen to the equilibrium quantity.