Suppose the Fed bought $150 million of U.S. securities from security dealers. The reserve requirement is 20 percent, and there are no initial excess reserves. A few weeks later, if the public's holdings of currency are constant and the banks have loaned all excess reserves, the money supply will increase by:

a. $150 million. b. $300 million.
c. $600 million. d. $750 million.


d

Economics

You might also like to view...

The above figure shows two Lorenz curves. Lorenz curve A shows the distribution of income and Lorenz curve B shows the distribution of wealth. Which statement below is CORRECT?

A) The Lorenz curve for wealth shows that wealth is distributed less equally because wealth does not include human capital. B) The Lorenz curve for income shows that income is distributed less equally because income does not include income from stocks and bonds. C) The Lorenz curves show wealth is greater than income. D) The Lorenz curves show income is greater than wealth.

Economics

In an increasing-cost industry, an increase in output will lead to

A) an downward shift in the ATC curve. B) an downward shift in the MC curve. C) a reduction in long-run per-unit costs. D) an increase in long-run per-unit costs.

Economics

If government wishes to increase the quantity of higher education consumed, what can be done to accomplish this?

A) Charge tuition that is below the full costs of providing the educational services B) Operate public colleges C) Provide reduced tuition to students D) Any of the above alternatives would increase the consumption of education E) The government should not attempt to increase education, since it is a private good

Economics

Between 1994 and 2015, farmland prices were

A. decreasing slowly. B. increasing sharply. C. largely stable. D. decreasing sharply.

Economics