A decrease in the required reserve ratio will:
a. reduce commercial bank loans and reduce the money supply.
b. increase commercial bank loans and reduce the money supply.
c. increase commercial bank loans and increase the money supply.
d. decrease commercial bank loans and increase the money supply.
c
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Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause
a. an increase in the supply of piercings and a lower price for piercings. b. an increase in the supply of piercings and a higher price for piercings. c. a decrease in the supply of piercings and a higher price for piercings. d. a decrease in the supply of piercings and a lower price for piercings.
Which of the following is adverse selection?
a. the risk associated with selecting stocks in only a few specific companies b. the risk that a person will become overconfident in his ability to select stocks c. a high-risk person being more likely to apply for insurance d. after obtaining insurance a person having less incentive to be careful