Assume the commercial banking system has checkable deposits of $20 billion and excess reserves of $2 billion when the reserve ratio is 25 percent. If the reserve ratio is then lowered to 20 percent, we can conclude that the:
A. Banking system now has excess reserves of $3 billion
B. Monetary multiplier has decreased
C. Maximum money-creating potential of the banking system has been increased by $7 billion
D. Fed has decided that money supply needed to be reduced
A. Banking system now has excess reserves of $3 billion
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Which of the following is not a reason why government officials are willing to impose entry barriers?
A) to increase economic efficiency B) to raise revenue C) to promote an equitable distribution of income D) to encourage innovation which may improve the standard of living in the long run
A firm that is the only seller of a good or service that does not have a close substitute is called
A) a monopoly. B) a market maker. C) a price maker. D) an oligopolist.