Please help with review questions. 1. If banks operated under a 100 percent rese
ID: 1195800 • Letter: P
Question
Please help with review questions.
1. If banks operated under a 100 percent reserve system, commercial banks would not be able to create any further money.
Select one:
True
False
2. A vertical curve that defines the level of full-employment or potential output based on a given amount of resources, efficiency, and technology in the economy is called:
Select one:
a. the short-run aggregate supply curve.
b. the long-run aggregate supply curve.
c. the aggregate demand curve.
d. none of the above.
3. A vertical curve that defines the level of full-employment or potential output based on a given amount of resources, efficiency, and technology in the economy is called:
Select one:
a. the short-run aggregate supply curve.
b. the long-run aggregate supply curve.
c. the aggregate demand curve.
d. none of the above.
Explanation / Answer
1.If banks operated under a 100 percent reserve system, commercial banks would not be able to create any further money. True. The banks if kept 100% reserves, there will be no loanable funds and bank will not be ablw to create credit.
2.In the long-run the aggregate supply curveis perfectly vertical, reflecting economists' belief that changes in aggregate demand only cause a temporary change in an economy's total output.
3.In the long-run the aggregate supply curveis perfectly vertical, reflecting economists' belief that changes in aggregate demand only cause a temporary change in an economy's total output.