<span>1. Suppose Oscar withdraws $100 from his checking account and deposits it into his savings account. This transaction causes M1 to A. Increase by $100 and M2 to remain the same. B. Decrease by $100 and M2 to remain the same. C. Decrease by $100 and M2 to increase by $100. D. Remain the same and M2 to increase by $100</span>B<span>2. Suppose Megan withdraws $75 from her savings account and deposits it into her checking account. This transaction causes M1 to A. Increase by $75 and M2 to remain the same. B. Decrease by $75 and M2 to remain the same. C. Increase by $75 and M2 to decrease by $75. D. Remain the same and M2 to increase by $75.</span>A<span>3. Suppose Jared takes $200 from his savings account and holds it as cash. The immediate result of this transaction is that M2 A. Increases by $200 and M1 remains the same. B. Decreases by $200 and M1 remains the same. C. And M1 do not change. D. Remains the same and M1 increases by $200.</span>D<span>4. A single bank with $10,000 of reserves and a reserve ratio of 25 percent could support total transactions account balances of at most A. $10,000. B. $5,000. C. $40,000. D. $25,000.</span>C<span>5. A single bank with $20,000 of reserves and a reserve ratio of 5 percent could support total transactions account balances of at most A. $400,000. B. $1,000. C. $100,000. D. $20,000.</span>A<span>6. Initially a bank has a required reserve ratio of 20 percent and no excess reserves. If $5,000 is deposited into the bank, then initially, ceteris paribus, A. This bank can increase its loans by $5,000. B. This bank can increase its loans by $4,000. C. Total reserves will increase by $4,000. D. Required reserves will increase by $5,000.</span>B<span>7. Initially a bank has a required reserve ratio of 10 percent and no excess reserves. If $1,000 is deposited into the bank, then, ceteris paribus, A. This bank can increase its loans by $900. B. This bank can increase its loans by $1,000. C. Total reserves will increase by $900. D. Required reserves will increase by $1,000.</span>A<span>8. If total reserves for a bank are $12,000, excess reserves are $2,000, and demand deposits are $100,000, the money multiplier must be A. 20. B. 15. C. 10. D. 5</span>C<span>9. If the banking system has demand deposits of $100,000, total reserves equal to $15,000, and a required reserve ratio of 10 percent, the banking system can increase the volume of loans by a maximum of A. $5,000. B. $50,000. C. $85,000. D. $100,000.</span>A<span>10. Suppose a banking system has a required reserve ratio of 0.15. How much can the money supply increase in response to a $1 billion increase in excess reserves for the whole banking system? A. $1 billion. B. $150 million. C. $15 billion. D. $6.67 billion.</span><span>B</span>
Explanation: In simple words, Variable cost is that cost of the business that changes with level of production. Hourly wage rate of workers, electricity bill of factory are some of many examples of variable cost.
The electricity consumption is fixed per unit, but if the level of production rises the electricity bill also rises as more units will be consumed.
Hence, from the above we can conclude that the right option is A.
Real wage is the nominal wages adjusted for price changes. It reflects the purchasing power earned by the workers.
There will be a direct and positive relationship between real wages and number of workers who are willing to work. This means when there is an increase in the real wages, more workers will be willing to work because they will be earning more. Reverse will be the situation in case of reduced real wages.
