Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 25%. If the Fed sells $5 million worth of government securities to the public, the change in the money supply will be
A. $100 million.
B. $25 million.
C. -$5 million.
D. -$20 million.
Answer: D
You might also like to view...
Credibility is not important in ________
A) new Keynesian and traditional Keynesian theory B) real business cycle and traditional Keynesian theory C) real business cycle and new Keynesian theory D) traditional Keynesian, new Keynesian and real business cycle theory
Because a competitive firm is a price taker, it faces a demand curve that is:
a. perfectly inelastic. b. relatively inelastic. c. relatively elastic. d. perfectly elastic.
Which of the following should be held constant when calculating an income elasticity of demand?
a. the price of the good b. prices of related goods c. tastes d. All of the above should be held constant.
Mika withdraws $100,000 from her trust fund to start up her own manicure business. The trust fund earns 4 percent interest. In order to properly account for all costs of her business, Mika must not forget:
A. the explicit cost of $4,000. B. the implicit cost of $4,000. C. the implicit cost of $104,000. D. the explicit cost of $104,000.