During the second half of 2008, the Fed approximately doubled the reserves of the commercial banking system. As a result, the M1 money supply
a. fell sharply, because the banks used the excess reserves to extend additional loans.
b. also approximately doubled.
c. was unchanged, because bank reserves will not affect the M1 money supply.
d. increased, but by a much smaller amount, because the banks used only a small portion of their excess reserves to extend additional loans.
D
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Ms. Krupsky has shorthand and typing skills and still finds herself unemployed. In today's economy, Ms. Krupsky is an example of what type of unemployment?
A) cyclical unemployment B) frictional unemployment C) structural unemployment D) None of the above answers is correct.
Banks can continue to make loans until their
A) actual reserves equal their excess reserves. B) excess reserves equal their required reserves. C) actual reserves equal their required reserves. D) actual reserves equal their checking account balances.
Intermediate inputs are
A) goods used for household consumption only. B) goods used for government consumption only. C) goods purchased by one business from another to use in production. D) goods purchased by foreigners. E) raw materials used in the production process.