Suppose that an economy is currently producing at a point that lies inside of its production possibilities set. Which of the following would best explain this circumstance?
A) The prevailing level of technology prevents the economy from producing at a point closer to the frontier of the production possibilities set.
B) The economy does not have enough resources to produce at a point closer to the frontier of the production possibilities set.
C) The economy is experiencing a high level of unemployment.
D) Any of the above statements could explain this situation.
E) None of the above statements could explain this situation.
C
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If a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has total reserves of
A) $16,000. B) $20,000. C) $26,000. D) $36,000.
The equilibrium interest rate:
A. allocates the available supply of loanable funds to investment projects that have high enough rates of return to justify the borrowing. B. rises when the supply of loanable funds increases. C. is the price paid for the use of any resource. D. affects the size of total output but not the composition of that output.