The required reserve ratio is 10 percent, and the potential change in demand deposits is $100 million. What are original excess reserves?

When the Fed purchases $1000 worth of government bonds from the public, the U.S. money supply eventually increases by

a. more than $1000. b. exactly $1000. c. less than $1000. d. None of the above are correct.

Verizon has a monopoly over local telephone service. If Verizon is producing where marginal revenue is greater than marginal cost, the firm

A. is maximizing profits. B. must be earning zero profit. C. could increase profits by increasing output. D. could increase profits by reducing output.