If you deposit a $50 bill in a commercial bank that has a 10 percent legal reserve requirement, the bank will:
A. have $45 of additional excess reserves.
B. be capable of lending an additional $500.
C. be capable of lending no more than an additional $50.
D. have $50 of required reserves.
A. have $45 of additional excess reserves.
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To maintain a pegged rate, a nation faces a trilemma and must also:
A) generate extra export revenues. B) watch carefully to ensure imports and exports are equal. C) adjust its interest rates and money supply to ensure the home interest rate is equal to the foreign interest rate to prevent pressure on the exchange rate. D) restrict foreign capital inflows and domestic capital outflows.
Personal consumption expenditures:
a. represent close to two-thirds of GDP. b. are equal to personal income minus individual taxes. c. include durable good purchases but not nondurable good purchases. d. do not include any intangible consumption items. e. include all goods and services bought by the government.