Suppose the money multiplier in the United States is 3. Suppose further that if the Fed decreased the discount rate by 1 percentage point, banks change their reserves by 300. To increase the money supply by 2,700 the Fed should:
A. reduce the discount rate by 3 percentage points.
B. raise the discount rate by 3 percentage points.
C. raise the discount rate by 10 percentage points.
D. reduce the discount rate by 10 percentage points.
Answer: A
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Refer to Figure 11-14. Which of the following could explain why the United States and China use different input combinations to produce a given quantity of cotton and yet, each country produces that quantity at the lowest possible cost?
A) because the United States has more sophisticated technology and therefore is more efficient in cotton production B) because the prices of inputs are not the same for the two countries: labor is relatively lower-priced and capital is relatively higher priced in the United States C) because the prices of inputs are not the same for the two countries: labor is relatively lower-priced and capital is relatively higher priced in China D) because the marginal product per dollar spent on capital yields a higher return in the United States than in China
Starting from short-run equilibrium, wage rates rise. What is the effect on the price level and Real GDP in the short run?
A) The price level rises and Real GDP falls. B) The price level falls and Real GDP rises. C) The price level rises and Real GDP rises. D) The price level falls Real GDP falls.
Compared to a perfectly competitive industry, a monopolist with the same marginal cost and demand curve will charge:
a. a higher price and produce a higher volume of output.
b. a lower price and produce a higher volume of output.
c. a lower price and produce a lower volume of output.
d. a higher price and produce a lower volume of output.
e. the same price and produce the same volume of output.
Exhibit 7-10 Price and cost data for a firm Q P AVC ATC MC 0 $12 ? ? ? 1 12 3 5 5 2 12 5 6 7 3 12 7.3 8 12 4 12 9.5 10 16 In Exhibit 7-10, following the rule regarding MR and MC, the most profitable output level is:
A. 1. B. 2. C. 3. D. 4.