If the required reserve ratio is a uniform 25 percent on all deposits, the money multiplier will be:

A. 4.00.
B. 2.50.
C. 0.40.
D. 0.25.


Answer: A

Economics

You might also like to view...

When the Fed changes the quantity of money, there is an immediate effect on

A) the inflation rate but not the price level. B) the nominal interest rate. C) real GDP. D) the price level and the inflation rate. E) the price level but not the inflation rate.

Economics

The opportunity cost of an activity is

A) the dollar cost to engage in the activity. B) the value of the resources needed to conduct the activity. C) the same for all who participate in the activity. D) what you sacrifice to engage in the activity.

Economics

In the late 1980s, Canada embarked on an ambitious policy of reducing inflation to zero. Inflation did come down, while the unemployment rate ________, which ________ the U.S. disinflation experience of the 1980s

A) rose, runs counter to B) rose, duplicates C) remained nearly constant, runs counter to D) remained nearly constant, duplicates

Economics

If the marginal propensity to consume (MPC) decreases, then

A) the marginal propensity to save (MPS) decreases. B) the multiplier decreases. C) the multiplier increases. D) MPC + MPS is less than 1.

Economics