The required reserve ratio is 10 percent, but banks actually keep 20 percent on reserve. The actual money multiplier will be
a. 10.
b. 9.
c. 5.
d. 2.
e. 1.
c
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Purchasing power parity means equal rates of return
Indicate whether the statement is true or false
In calculating the CPI, a fixed basket of goods and services is used. The quantities of the goods and services in the fixed basket are determined by
a. surveying consumers. b. surveying sellers of the goods and services. c. working backward from the rate of inflation to arrive at imputed values for those quantities. d. arbitrary choices made by federal government employees.
The U.S. desire for foreign currency represents
A. A point of disequilibrium in the foreign exchange market. B. A supply of U.S. dollars. C. A demand for U.S. dollars. D. The foreign demand for U.S. exports.
Exhibit 4-3 Supply and demand curves
Initially the market shown in Exhibit 4-3 is in equilibrium at P2, Q2 (E2). Changes in market conditions result in a new equilibrium at P2, Q4 (E4). This change is stated as a(n):
A. increase in supply and an increase in demand. B. increase in supply and a decrease in demand. C. decrease in demand and a decrease in supply. D. increase in demand with supply held constant at S2.