public does not directly hold any cash. Also‚ suppose all banks hold excess reserves equal to 4% of deposits and the required reserve ratio is 5%. a. (5 pts.) Calculate the money multiplier. b. (5 pts.) What is the total money supply (or money stock)? c. (10 pts.) Bank of America (BOA) has $300 million in deposits and $10 million in net worth. Draw a balance sheet for BOA. Now suppose that all banks in the economy decide to reduce excess reserves to just 1%. d
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is defined as the process of determining the needs and wants of consumers and being able to deliver products that satisfy those needs and wants‚ through an exchange process. A demand is a want for which the consumer is prepared to pay a price. A want is anything or service the consumer desires or seeks. Wants become demands when backed by purchasing power. A need is anything the consumer feels to keep himself alive and healthy. A transaction consists of a value between two parties. Marketing is
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Supply and Demand Shopping for a personal computer these days involves more than comparing hard drive size‚ physical memory‚ and price. A couple of years ago‚ when I was in the market for a new computer‚ I knew I wanted a laptop‚ and that’s about all I knew. I researched the internet looking for the type of laptop I would need as an adult online student. The details I needed to consider were use‚ size‚ weight‚ battery life‚ warranty‚ and operating system. This was at the time when tablet computers
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Examples 6.3‚ 6.4‚ and 6.5 (page 338) – Large Sample Hypothesis Test of a Mean Example 6.3 A manufacturer of cereal wants to test the performance of one of its filling machines. The machine is designed to discharge a mean amount of 12 ounces per box‚ and the manufacturer wants to detect any departure from this setting. This quality study calls for randomly sampling 100 boxes from today’s production run and determining whether the mean fill for the run is 12 ounces per box. Set up a test of
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1. Suppose there are 100 consumers with identical individual demand curves. When the price of a movie ticket is $8‚ the quantity demanded for each person is 5. When the price is $4‚ the quantity demanded for each person is 9. Assuming the law of demand holds‚ which of the following choices is the most likely quantity demanded in the market when the price is $6? Explain and show calculations‚ While the question asks of the choices given what the quantity demanded will be‚ there are no choices
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rate of 3%? Answer: P = $40/(0.05 - 0.03) = $40/0.02 = $2‚000 Topic 2: Supply and Demand 1) Suppose that the demand for oranges increase. Explain the long -run effects of the guiding function of price in this scenario. Answer: In the long run‚ the higher price of oranges will signal more firms to enter the orange market‚ as it will seem more profitable than some other markets. As firms enter‚ supply increases‚ causing the price to fall relative to the short-run price and quantity
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exchange rates are determined 2. The scarcity principle implies that A. people will never be satisfied with what they have B. as wealth increases‚ making choices becomes less necessary C. the prices of scarce goods must rise due to excess demand D. choices must be made and tradeoffs will occur 3. The ’no-free-lunch’ principle is another name for the A. cost-benefit principle B. the scarcity principle C. the ceteris paribus principle D. the marginal (not average) principle
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interest rates start to increase mortgage demand and put pressure on house prices. Comparing cities doesn’t offer accurate postulating because price-to-income and price-to-rent ratios vary widely from city to city. An unexpected rise in real interest rates that raises housing costs‚ or a negative shock to a local economy‚ would lower housing demand‚ slowing the growth of house prices‚ and possibly even leading to a house price decline. When the market demand for properties in a particular area is
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The historical event that I chose to address in terms of labor supply and demand was the technology boom of the 1990s. As the technology boom began to grow‚ the demand for computers and other electrical devices began to rise. People wanted to bring more of the electronic devices into their homes and their businesses. Car makers began putting technology into vehicles that would allow your windshield wipers to turn on automatically as soon as water hit the windshield. Companies began creating technology
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Running head: The Effects of Supply and Demand The Effects of Supply and Demand Sheri Wren University of Phoenix 16 August 2010 The effects of Supply and Demand Many items factor in on a decision to buy anything these days. I have chosen a car to be the item that I will discuss today. I will be discussing what factors can cause possible changes in supply and demand for my good. I will also discuss some substitutes and compliments for my good. Finally I will discuss how the necessity
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