If a bank has $1 million in demand deposits, $350,000 in reserves, and faces a 30 percent reserve requirement, the amount of money that a bank could initially create by loaning out their excess reserves is:
a. $50,000
b. $300,000.
c. $350,000.
d. $700,000.
a
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Discuss why a budget deficit results in a different real interest rate under the Ricardo-Barro effect than under the crowding-out effect
What will be an ideal response?
U.S. Treasury bills pay no interest but are sold at a ________. That is, you will pay a lower purchase price than the amount you receive at maturity
A) premium B) collateral C) default D) discount
According to the modern view, the impact of expansionary monetary policy will
a. be the same in the long run as in the short run. b. be the same regardless of whether the effects of the policy are anticipated or unanticipated. c. initially be an increase in real output if the policy is unanticipated, but in the long run, the primary result will be a higher price level (inflation). d. initially be an increase in prices if the policy is unanticipated, but in the long run, the primary result will be larger real output.