1. If a bank has deposits of $10,000 and reserves of $5,000 and if the reserve requirement is 20%, it can make loans of $5,000.

A. True

B. False

2. A decrease in the demand for money would result from:

an increase in the price level.an increase in income.a decrease in real GDP.an increase in nominal GDP.

3. If long-term interest rates are 8% and short-term rates are 3%, the market expects:

short-term rates to remain the same.

short-term rates to rise.

there is no relationship between long-term and short-term rates.

short-term rates to fall.