A bank is "loaned up" when
A) legal reserves are zero.
B) excess reserves are zero.
C) primary reserves are zero.
D) required reserves are zero.
Ans: B) excess reserves are zero.
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We limit ourselves to two periods in the intertemporal model of the business cycle because
A) we need to concentrate on the two phases of the business cycle. B) we can assume that people can live two periods of, say, 30 years. C) this is all we need to emphasize the intertemporal trade-off. D) we need an even number of periods.
A government action that can help correct positive externalities is
A. an effluent fee charged to producers of the good that provides external benefits. B. a subsidy to consumers of the good that provides external benefits. C. a tax on producers of the good that provides external benefits. D. regulations aimed at reduced production by sellers of the good that provides external benefits.