If the Federal Reserve purchases $1,000 in bonds and the reserve requirement ratio is 0.2, what will be the total change in reserves at all banks assuming there are no excess reserves?
a. +$500
b. +$5,000
c. -$500
d. -$5,000
e. +$1,000
E
You might also like to view...
Refer to the above figure. A movement from B to D would be a result of
A) an increase in the quantity of money in circulation. B) an increase in the marginal income tax rate. C) an increase in labor productivity. D) an increase in government expenditures.
The balanced budget multiplier applies when a $50 billion increase in government expenditure is financed by a $50 billion ________ in tax revenue and the balanced budget multiplier shows that in this case there is ________ effect on aggregate demand
A) increase; no B) decrease; a positive C) increase; a positive D) increase; a negative E) decrease; no
Refer to Figure 3-5. At a price of $15, the quantity sold
A) is 2 units. B) is 4 units. C) is 6 units. D) cannot be determined.
The major drawback of a price ceiling is
a. it causes a surplus. b. government regulations of this kind are difficult to enforce. c. it causes a shortage. d. There is no drawback.