If a fear of increased bankruptcies of firms causes banks to increase their reserve to deposit ratio, then
a. the money supply and money multiplier will rise.
b. the monetary base and the money multiplier will fall.
c. there will be no change in the money multiplier, but the money supply will fall.
d. the money multiplier and the money supply will fall.
D
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Explain what is meant by marginal product
What will be an ideal response?
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2. B. P2 and Y3. C. P3 and Y1. D. P2 and Y2.
Which of the following is true for an expansionary fiscal policy?
A. It causes an increase in the aggregate demand. B. It decreases the level of imports. C. It leads to a fall in the interest rate. D. It has no impact on the aggregate output.
Suppose that in a month the price of movie rentals increases from $2 to $2.20. At the same time, the quantity of movie rentals supplied increases from 100 to 110. The price elasticity of supply for movie rentals (calculated using the initial value formula) is:
A. negative. B. inelastic. C. unit elastic. D. elastic.