1. Starting from long-run equilibrium, use the basic (static) aggregate demand and aggregate supply diagram to show what happens in both the short run and the long run when there is an increase in petroleum prices?

2. Suppose that CBA bank has total deposits of $6,000,000 and keeps $750,000 in total reserves. Let’s assume you withdraw $15,000 from the bank a. How much is the reserve ratio? 

3. Write the equation that is used to calculate the reserve ratio. b. Before you withdraw $15,000, what is the maximum amount that the bank can lend out?

Answer rating: 100% (QA)

Answer 1 The economy is depicted in the graphic below with the long run equilibrium at E where the aggregate demand curve short run aggregate supply c... View the full answer