Assuming a required reserve ratio of 8%, interest rate on reserves of 0.5%, and interest rate on loans of 4%, what is the effective cost of the reserve requirement on a $1000 deposit?

A rise in the price level changes aggregate demand because

A) firms increase their investment when prices are higher. B) the real value of people's wealth varies directly with the price level and so does their spending. C) the real value of people's wealth decreases and so they decrease their consumption. D) the more money people have, the more it is worth and hence the more goods and services they demand.

? The silverware industry has been in serious decline since the 1980s. Family dining habits are less formal so people purchase less silverware. More recently, the price of silver jumped from $5 to $20 per ounce. Which graph in Figure 4-12 best illustrates these developments?

A. 1 B. 2 C. 3 D. 4