When banks reduce the reserve ratio, the potential money multiplier
A) increases.
B) decreases.
C) remains unchanged.
D) sometimes increases, and sometimes decreases depending on the rate of inflation.
A
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Read the following statements and determine if they are true or false
I. According to the quantity theory of money, an increase in the growth rate of the quantity of money increases inflation in the long run. II. Historical and international data show that there is no correlation between inflation and money growth. A) I and II are both true. B) I and II are both false. C) I is true and II is false. D) I is false and II is true.
The entire sequence of a decline in aggregate economic activity followed by recovery, measured from peak to peak or trough to trough is a
A) long-run trend. B) potential output path. C) business cycle. D) recurrent comovement.
A monopoly price reflects a good's marginal utility
a. True b. False Indicate whether the statement is true or false
When equilibrium real GDP falls short of potential GDP, there is a(n)
a. inflationary gap. b. potential gap. c. recessionary gap. d. precautionary gap.