If Reserves in the Banking System Increase by $100, Then

question 141

Multiple Choice

If reserves in the banking system increase by $100, then chequable deposits will increase by $100 in the simple model of deposit creation when the desired reserve ratio is ________.

• A) 0.01
• B) 0.10
• C) 0.20
• D) 1.00

Evaluate the appropriateness of a linear model for given data.

Calculate and interpret the coefficient of determination (R^2).

Understand the concept of least squares in the context of linear regression.

Apply regression analysis to predict outcomes in real-world contexts.

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Definitions:

Economies of Scale

Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output. The advantage arises due to the inverse relationship between per-unit fixed cost and the quantity produced.

Elastic

A characteristic of a demand or supply curve that indicates a high sensitivity to changes in price.

Price Ceiling

A legally imposed maximum price on a good or service, typically set below the market equilibrium, leading to shortages.

Marginal Revenue

Marginal revenue is the additional income that is gained from selling one more unit of a good or service.