If the Fed buys $10 million dollars in government bonds from a bank, and the legal reserve requirement is 20 percent, the banking system is able to expand the money supply by
a. $10 million
b. $8 million
c. $2 million
d. $40 million
e. $50 million
E
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A natural monopoly that is regulated to set its price equal to its marginal cost
A) incurs an economic loss. B) makes zero economic profit. C) makes an economic profit. D) creates the maximum deadweight loss.
The socially optimal amount of pollution is
A) zero. B) greater than zero. C) indeterminant. D) unattainable.
When firms participate in group health insurance for all employees, it
A) raises rates for everyone, because it brings unhealthy people into the pool. B) raises rates for unhealthy people. C) may lower rates for all people to the extent that it keeps healthy people in the pool. D) prevents unhealthy people from "selecting out," to the detriment of healthy people. E) increases the amount of information available to insurers about the population.
Economists have observed that fiscal policy can be implemented very quickly while monetary policy is much slower to enact
a. True b. False Indicate whether the statement is true or false