Banking
If there is a 20% reserve requirement, what is the money multiplier.
5
What is the slope of the demand in a perfectly competitive firm?
Horizontal/ 0
What are barriers to entry?
Very high start up costs.
What happens to aggregate demand if interest rates increase?
Decrease in aggregate demand.
What does inflation do to the value of a currency?
Depreciates the currency
What is the relationship between assets and liabilities?
They must be equal.
Where is profit maximizing quantity in a perfectly competitive firm?
Where MR = MC
What is the slope of demand in a monopoly?
Downwards sloping
What is the x and y axis of a money market.
Nominal interest rate and quantity of money.
If a currency appreciates, what happens to exports?
Exports decrease.
what is owners equity?
the portion of a company's assets that an owner can claim
When should a firm shut down in perfect competition?
When they can't cover their fixed costs.
Where is the demand elastic in a monopoly?
When marginal revenue is positive.
Decrease interest rate.
What is foreign exchange?
The relationship between the currency of two different places.
When in ample reserves, what can the fed do to increase money supply?
Decrease interest on reserves.
Why is orange juice considered a commodity?
It is the same product no matter who makes it.
Where is revenue maximizing quantity in a monopoly?
Where revenue is equal to 0
Define interest rate when saving.
A percentage of the intial money that is added to the investment to try and match inflation.
If current account increases what happens to financial account?
Financial Account decreases.
IF someone deposits 500 dollars into the bank, the reserve requirment is 10%, and the bank loans out all excess reserves. What is the total money supply after everything is loaned out?
$5,000
An increase in the supply of product A resulted in a increase of the price and quantity of product B. What is product B in relation to product A
A complement
Why do profit-maximizing monopolies generate dead weight loss?
If budget deficit increases, what happens to private savings?
Crowding out of investment.
Where would the purchase of a crane from another country appear in the balance of payments?
Current account deficit.