In a simplified banking system in which all banks are subject to a 10 percent required reserve ratio, a $1,000 open market sale by the Fed to a bank would cause the money supply to:
a. increase by $1,000.
b. increase by $100,000.
c. decrease by $10,000.
d. decrease by $1,000.
e. remain unchanged.
c
You might also like to view...
Provide a short definition of sustainable development
What will be an ideal response?
When a freely functioning market is in disequilibrium:
a. the government must set a price ceiling. b. the government must set a price floor. c. the price and quantities demanded and/or supplied change until equilibrium is established. d. it will continue to remain in disequilibrium. e. it will reach equilibrium at a very high/low price.
An adverse supply shock generally decreases the price level and real GDP.
a. true b. false
If the supply curve is relatively flat, then the price elasticity of supply will be:
A. relatively large. B. relatively low. C. unit elastic. D. greater than one.