If proceeds from loans are NOT deposited back in the banking system, then
A. the Fed intervenes by selling more Federal government bonds.
B. the magnitude of the multiplier process is reduced.
C. the magnitude of the multiplier process is increased.
D. there is no effect on the magnitude of the multiplier process.
Answer: B
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A) Grim, the mortician B) Green, the barley farmer C) Gristle, the butcher D) Grippe, the doctor
Which of the following macroeconomic variables would you exclude from an index of leading economic indicators?
A) Money supply B) Industrial production C) Inventory investment D) Residential investment
The equilibrium wage rate in an industry is found by
A) the intersection of the market demand curve for labor and the marginal revenue product curve of labor. B) the intersection of the firm's demand curve for labor and the firm's supply curve of labor. C) the intersection of the market demand curve for labor and the market supply curve of labor. D) negotiations between the union leadership and the managers of the firms.
In a closed economy, national savings will be:
A. lower than private savings if the government runs a deficit. B. higher than private savings if the government runs a deficit. C. lower than private savings if the government runs a surplus. D. equal to private savings if the government runs a deficit.