Which of the following events is the most likely to create stagflation?
A. An increase in the money supply.
B. A reduction in the amount spent on national defense.
C. A doubling of oil prices.
D. A decrease in investment spending.
Answer: C
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If a state government finances treatment facilities for alcoholics out of revenues from a tax on liquor, it is
a. basing its taxation on ability to pay b. levying a proportional tax c. able to afford fewer treatment facilities when liquor sales decrease d. discouraging alcoholics from seeking treatment at government facilities e. providing a service that the private sector cannot provide
A bank's assets consist of $500,000 in total reserves, $1,600,000 in loans, and a building worth $1,200,000 . Its liabilities and capital consist of $2,000,000 in demand deposits and $1,300,000 in capital. If the required reserve ratio is 30 percent, what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the banking system as a result?
a. zero; zero b. $50,000; $50,000 c. $50,000; $500,000 d. The bank has insufficient reserves to meet its reserve requirements.