Suppose the required reserve ratio is 100%. Explain if the Federal Reserve could still change the money supply with open market operations?
What will be an ideal response?
The Federal Reserve could still change the money supply because the initial purchase or sale of Treasury securities would still change checking account deposits. The simple deposit multiplier would equal one, so if the Fed purchased $1 million in securities, deposits would increase by $1 million, and if the Fed sold $1 million in securities, deposits would decrease by $1 million.
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Which of the following statements is true?
A) If the nominal wage rate increases, the opportunity cost of current consumption decreases. B) If the unemployment rate increases, the opportunity cost of current consumption decreases. C) If the real interest rate increases, the opportunity cost of current consumption increases. D) If the real wage rate increases, the opportunity cost of current consumption decreases.
Use the above figure. The profit-maximizing output and price for this monopolistically competitive firm are respectively
A) 100 and $19. B) 160 and $13. C) 160 and $16. D) 210 and $15.
In this situation, the monopoly's profits are:
a. 0.40. b. 0.16. c. 0.12. d. 0.08.
When a bank makes loans with excess reserves, it
A. creates money. B. destroys money. C. alters the composition of M1. D. leaves the money supply unchanged.