In order to increase the money supply, the banking system must have
a. required reserves.
b. the authority to buy corporate stocks.
c. the authority to print U.S. currency.
d. excess reserves.
e. the authority to engage in interstate banking.
D
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To close a recessionary gap, the Fed would
A) decrease the money supply. B) increase interest rates. C) sell bonds. D) increase the money supply.
If an economy consumes 75 percent of any increase in real GDP and spends 10 percent of this increased income on imports, then a decline in government spending by $60 million will result in a total reduction in equilibrium income of:
a. $171.43 million. b. $123.47 million. c. $151.63 million. d. $73.47 million. e. $71.43 million.
In a flexible exchange rate system, which of the following would NOT cause the U.S. dollar to depreciate relative to the British pound?
A) a decrease in demand for British goods in the United States B) an increase in demand for British goods in the United States C) a decrease in British demand for U.S. exports D) a shift to the left in the supply of British goods to the United States
If the Fed wants to reduce the inflation rate, it should lower the discount rate.
a. true b. false