If the required reserve ratio is 100 percent, could the Federal Reserve still change the money supply with open market operations? Explain whether they could or could not
What will be an ideal response?
The Federal Reserve could still change the money supply, because the initial purchase or sale of government securities would change checking account deposits. For instance, if the Fed purchases a $1,000 government bond from you and you deposit the funds in the bank, then checking account deposits and the money supply would go up $1,000. The simple deposit multiplier with a 100 percent required reserve ratio would equal one, not zero, so an increase in reserves still increases checking account deposits.
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A retailer buys goods worth $15,000 from a manufacturer and sells it for $18,250. He adds a value of ________ to the production process
A) $15,000 B) $3,250 C) $33,250 D) $18,250
A country undertakes a revaluation in order to
A) decrease its net exports. B) move to a flexible exchange rate system. C) lower the value at which its currency is pegged. D) increase its net exports.
A negative income tax system would provide all households, including the poor, with:
a. cash payments. b. incentives to earn income. c. higher income levels. d. medical assistance. e. lower tax bills than it does .
The Springfield Bank received 1,500 inquiries following its latest advertisement describing its "establish a Certificate of Deposit (CD)-get a free CD (compact disk)" promotion in the Springfield Shopper, a local newspaper. The most recent similar ad in a similar advertising campaign was in the Brockman Business Newsletter. A local business publication generated 500 inquiries. Each ad in the Springfield Shopper costs $500. Each ad in the Brockman Business Newsletter costs $125. Inquiries from both publications have the same success rate in turning inquiries into sales.(a) Assuming that additional ads will generate similar response rates, is Springfield Bank running an optimal mix of ads in the Springfield Shopper and the Brockman Business Newsletter? Why or why not?(b) If you
claim that the Springfield Bank is currently running an optimal mix of ads, clearly explain why they are using an optimal mix of ads. If you claim that the Springfield Bank is currently not running an optimal mix of ads, clearly explain how the Springfield Bank can better manage the ads. What will be an ideal response?