Best National Bank operates with a 20 percent required reserve ratio. One day a depositor withdraws 500 from his or her checking account at this bank. As a result, the bank's excess reserves:
a. fall by 500 b. fall by 400.
c. rise by 100 d. rise by 500.
QUESTION 2__________ generally results in increases in per-capita GDP.
a. Civil war
b. High levels of inequality in the distribution of land ownership
c. Investment in human capital
d. A stock of natural resources
QUESTION 3Beginning from the full-employment level of real GDP, an increase in one of the components of the aggregate demand curve will increase the:
a. average level of prices (CPI).
b. unemployment rate.
c. natural level of real GDP.
d. level of investment spending.
e. level of government spending.
QUESTION 4There is a significant positive relationship between ________ and __________.
a. natural resource commodity exports, high levels of per capita GDP
b. investment in capital, high levels of per capita GDP
c. high levels of illiteracy, high levels of per capita GDP
d. limited government recognition of land tenure and property ownership, high levels of per capita GDP
QUESTION 5Imagine that Odyssey National is a brand new bank, and that its required reserve ratio is 10 percent. If it accepts a 1,000 cash deposit, then, excluding the 1,000 initial deposit, the banking system can increase the money supply by:
a. 900.
b. 910.
c. 1,000.
d. 9,000.
e. 10,000.
QUESTION 6Which of the following would cause an increase (rightward shift) in the short-run aggregate supply curve (SRAS)?
a. An increase in the long-run aggregate supply curve (LRAS).
b. A decrease in the CPI.
c. An increase in the CPI.
d. A decrease in oil prices.
QUESTION 7Imagine that Odyssey National is a brand new bank, and that its required reserve ratio is 10 percent. If it accepts a 1,000 deposit, then Odyssey National can increase the money supply by:
a. 900.
b. 910.
c. 1,000.
d. 9,000.
e. 10,000.
QUESTION 8The vicious circle of poverty makes it difficult for an LDC to:
a. establish political institutions. b. control inflation.
c. save and invest. d. fix its exchange rate.
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