Assume First Central Bank has a desired reserve ratio of 15 percent; $80,000 in total deposits, loans equal to $60,000, and has $20,000 in actual reserves. First Central can make additional loans totaling
A) $8,000.
B) $12,000.
C) $20,000.
D) $60,000.
E) $80,000.
A
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Indicate whether the statement is true or false
A “backstop resource” is a close substitute for a depletable resource that is available in almost unlimited supply but at a higher cost. Shale oil is a backstop resource for crude oil. Which of the following statements is correct?
A. The production of shale oil is likely to increase over time even if crude oil is still available. B. Shale oil is unlikely to be produced until all the crude oil has been depleted. C. The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil. D. In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price.