Author Question: If the reserve requirement was 15 and a bank customer makes a deposit of 500, the initial result ... (Read 71 times)

frankwu · **on:** Jun 30, 2018

If the reserve requirement was 15 and a bank customer makes a deposit of 500, the initial result would be:
a. a 75 increase in required reserves and a 425 increase in excess reserves.
b. a 425 increase in required reserves and a 75 increase in excess reserves.
c. a 75 increase in required reserves and a 3,333 increase in excess reserves.
d. a 3,333 increase in required reserves and a 425 increase in excess reserves.

Question 2

A look at macroeconomic data across countries reveals that when economies experience recessions, unemployment rates rise, but wages fall very little, if at all. Which of the following is most likely to support this observation?
a. Wages are determined by the interaction of the forces of labor demand and supply.
b. The demand for labor is derived demand and hence does not fall during recessions.
c. The labor market usually exhibits perfect competition.
d. The labor supply curve becomes perfectly inelastic during recessions.
e. Long term labor contracts make the wage rates sticky downwards.