Appendix: When two or more "independent" variables are highly correlated, then we have:
a. the identification problem
b. multicollinearity
c. autocorrelation
d. heteroscedasticity
e. complementary products
b
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Everything else held constant, an increase in the required reserve ratio will mean ________ in the M2 money multiplier and ________ in the M2 money supply
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease
Which of the following is not a defining characteristic of globalization?
a. Increased cross-border flow of trade in goods b. Increased cross-border flow of trade in services c. Increased international mobility of information d. Increased frequency of wars e. Increased mobility of individuals across borders
In a hyperinflation, the economy:
A. always collapses. B. can continue to function because people build expected inflation into wages and prices. C. will slow on its own to lower inflation. D. can continue to function but people are unwilling to hold any money.
Initially, the reserve ratio is 10 percent. Now banks decide they want an additional 10 percent of deposits as reserves. There are no currency drains. If the Fed buys $1 million of U.S. government securities, the money supply will
A. increase by $10 million. B. increase by $5 million. C. not change because of the excess reserves banks keep on hand. D. increase by $1 million.