Assume that households and businesses deposit $5000 in this bank and that this currency is added to the bank’s reserves. In column (1) show the bank’s balance sheet after this occurs. Is there a change in the money supply? In column (2) show what would happen if the bank now loans all of its excess reserves to a depositor. Is there a change in the money supply?
Suppose the First National Bank has the following simplified balance sheet. The reserve ratio is 20%.
No, currency has been reduced dollar-for-dollar with the $5000 increase in check able deposits. Yes, the $4000 excess reserves increase check able deposit money by $4000.
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The monetary base is the sum of:
A. currency in the hands of the public, reserves and M1. B. currency in the hands of the public and reserves in the banking system. C. M1 and reserves. D. reserves and M2.
The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year.
Silvia's opportunity cost of producing one computer is ________ pounds of beef.
A. 1/50 B. 25 C. 1/25 D. 50