All of the following except one are reasons the demand deposit multiplier may be smaller in practice than in theory. Which one is not a valid reason?
a. Banks do not want to hold excess reserves.
b. Some of the currency generated when bonds are purchased ends up outside of the banking system.
c. Banks sometimes hold more than their required reserves.
d. An open market operation may change the public's holding of cash.
e. All of the above are not valid reasons.
A
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If a firm is a union shop, then
A) a worker may elect to either join or not join the union. B) only workers who have been union members for two years may be employed. C) only union members may be employed by the firm. D) a non-union worker may be hired but must join the union within a certain time period.
A perfectly competitive wheat farmer in a constant-cost industry produces 1,000 bushels of wheat at a total cost of $50,000. The prevailing market price is $48. What will happen to the market price of wheat in the long run?
A) The price remains constant at $48. B) The price falls below $48. C) The price rises above $48. D) There is insufficient information to answer the question.