Author Question: The table below shows the data (in millions) for Wells Fargo Bank in September 2007 and September ... (Read 106 times)

deesands · **on:** Jun 29, 2018

The table below shows the data (in millions) for Wells Fargo Bank in September 2007 and September 2008. Suppose that the required reserve ratio is 3 percent.

2007 2008
Loans 79 100
Reserves 11 11
Deposits 247 266

The data show that
A) the currency drain ratio increased.
B) the Federal Reserve must have increased the required reserve ratio.
C) Wells Fargo had excess reserves and could create money in 2007.
D) Wells Fargo was only able to make more loans in 2008 because it gained more deposits.

Question 2

In the above figure, at any price between 8 per unit to 12 per unit, how many units will a profit-maximizing perfectly competitive firm produce?

A) None, because the producer will never choose to operate at a loss.
B) Less than 20 because this will reduce marginal cost.
C) Between 20 and 30, because variable costs are covered so the firm's losses will be minimized by producing rather than shutting down.
D) More than 30, because variable costs are covered so that the producer can earn economic profits.