In the simple deposit expansion model, a decline in checkable deposits of $500 when the required reserve ratio is equal to 20 percent implies that the Fed
A) sold $250 in government bonds.
B) sold $100 in government bonds.
C) sold $50 in government bonds.
D) purchased $100 in government bonds.
B
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A factor that helps to determine the demand for the dollar in the foreign exchange market is
A) the expected future exchange rate. B) the expected future interest rate. C) the amount of U.S. imports. D) the supply of U.S. dollars.
We go from personal income to personal disposable income by
A) subtracting undistributed profits. B) adding transfer payments. C) subtracting personal income taxes. D) subtracting depreciation. E) subtracting personal saving.
The economy is in equilibrium, TP = TE, and Real GDP is $500 billion. The MPC is 0.95, the multiplier is operative, and idle resources exist at each expenditure round. Autonomous investment spending rises by $4 billion. As a result, the TE curve shifts __________, inventory levels unexpectedly __________, business firms __________ the quantity of goods and services they produce, and Real GDP
__________ by __________. A) upward; fall; increase; rises; $3.8 billion B) upward; fall; increase; rises; $8 billion C) downward; rise; decrease; falls; $80 billion D) upward; fall; increase; rises; $80 billion E) downward; fall; decrease; falls; $3.8 billion
The labor demand curve slopes down because
A. fewer workers work at low wages. B. capital will substitute for labor as wages decrease. C. of the diminishing marginal product of labor. D. of the income effect of rising wages.