Suppose the required reserve ratio is 0.2 and the Fed buys $100,000 in government securities from Big Bank. The commercial banking system creates _____ as a result of this initial injection by the Fed
a. $1,000,000
b. $500,000
c. $100,000
d. $80,000
e. $200,000
b
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The components of M2 that are not also in M1:
A. pay lower rates of interest than do the components of M1. B. sum to an amount that is smaller than the sum of the components of M1. C. are usable for making payments, but at a greater cost or inconvenience than currency or checks. D. are not usable for making payments.
The GDP deflator is a broader measure of the price level than the CPI because
A) it covers sales tax. B) it covers rents. C) it covers investment. D) it factors out fluctuations in seasonal items.
When the federal government owns parks that are funded by tax dollars
a. park managers receive full information about visitor desires and make decisions accordingly. b. the same incentive structure exists for public park managers as private park managers. c. park managers devote much time and effort to satisfying political desires instead of visitor desires. d. park managers will be less likely to mismanage the park.
A decrease in the target for the federal funds rate would be an example of
A. expansionary fiscal policy. B. contractionary fiscal policy. C. expansionary monetary policy. D. contractionary monetary policy.