Refer to the table. If the legal reserve ratio falls from 25 percent to 10 percent, excess reserves of this single bank will:
A. rise by $6,000 and the monetary multiplier will increase from 4 to 10.
B. rise by $60,000 and the monetary multiplier will increase from 4 to 10.
C. fall by $6,000 and the monetary multiplier will decline from 30 to 10.
D. fall by $2,000 and the monetary multiplier will decline from 10 to 4.
A. rise by $6,000 and the monetary multiplier will increase from 4 to 10.
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If U.S. residents boycotts French goods, this will
A) reduce the demand for euros in the foreign exchange market. B) increase the demand for euros in the foreign exchange market. C) cause the euro to appreciate. D) have no effect on the euro.
Suppose an economy’s real GDP is $100,000 in year 1 and $110,000 in year 2. What is the growth rate of its GDP? Assume that population was 200 in year 1 and 205 in year 2. What is the growth rate in GDP per capital?
What will be an ideal response?