The _______ tells us how many additional dollars of deposits are created with each additional dollar of reserves.
A. reserve ratio, calculated as 1 divided by the money multiplier,
B. money multiplier, calculated as 1 divided by the reserve ratio,
C. reserve ratio, calculated as 1 minus the money multiplier,
D. money multiplier, calculated as 1 minus the reserve ratio,
Ans: B. money multiplier, calculated as 1 divided by the reserve ratio,
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Explain the logic of the multiplier effect
What will be an ideal response?
Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will
A) increase. B) remain constant. C) decrease. D) not change in a way that can be predicted.
Exogenous variables in the IS-LM model variables are
a. money supply b. autonomous consumption c. government spending d. prices e. all of the aboveFigure 7-4
A rival good
A) is one that is used up as it is consumed. B) is one that rival firms are trying to obtain. C) is exclusive. D) cannot be shared.