The money multiplier is approximated as being equal to:
A. demand deposits multiplied by the reserve ratio.
B. one divided by the federal funds.
C. demand deposits multiplied by the interest rate.
D. one divided by the reserve ratio.
Answer: D
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If the Fed does not take into account the additional policy channels available in an open economy, then ________ when conducting contractionary monetary policy
A) it is likely to decrease GDP too much and cause a recession B) it is likely to decrease GDP too little and inflation will persist C) it is likely to increase GDP too little and cause a recession D) it is likely to increase GDP too much and inflation will persist
Of all financial intermediaries, which of the following holds the most assets?
A) hedge funds B) the federal government C) commercial banks D) corporations
The law of diminishing marginal utility explains why
a. most individual demand curves are straight lines. b. the consumer's optimal purchase is at the tangency of an indifference curve and the budget line. c. most individual demand curves slope downward. d. marginal utility falls when total utility falls.
Negative externality occurs when
A. the production of a good harms third parties. B. the production of a good helps third parties. C. the consumption of a good helps third parties. D. a buyer is sold inferior and damaged merchandise.