A Change in the Reserve Requirement Causes a Change in All

question 117

Multiple Choice

A change in the reserve requirement causes a change in all of the following except

• A)The money multiplier.
• B)The lending capacity of the banking system.
• C)Excess reserves.
• D)Pretax income.

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Definitions:

Constant Returns to Scale

A situation in which increasing the amount of inputs in production results in a proportional increase in output.

Long-run Total Costs

The total costs incurred by a firm when all factors of production are variable, emphasizing the period where no costs are fixed.

Average-fixed-cost Curve

A curve that shows the relationship between the average fixed cost of producing a good and the quantity of the good produced, typically declining as production increases.

Marginal Product

The increase in output that results from employing one more unit of a particular input, holding all other inputs constant.