Decisions by Depositors to Increase Their Holdings of ________,Or of Banks

question 67

Multiple Choice

Decisions by depositors to increase their holdings of ________,or of banks to hold excess reserves will result in a ________ expansion of deposits than the simple model predicts.

• A)deposits;smaller
• B)deposits;larger
• C)currency;smaller
• D)currency;larger

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Definitions:

Shutting Down

A short-term decision by a firm to cease production when the market price is below variable costs, incurring losses only equal to fixed costs.

Total Revenue

The overall amount of money generated by a business from the sale of its goods or services.

Long-Run Equilibrium

A state in which supply and demand are balanced, and all firms in the industry are earning normal profits in the long term.

Short-Run Equilibria

A market condition where supply and demand are balanced, but only temporarily as external factors can soon alter this balance.