Increasing the reserve requirement ratio is
A) a contractionary policy because it lowers the amount of total reserves in the banking system.
B) a contractionary policy because it lowers the amount of excess reserves in the banking system.
C) an expansionary policy because it raises the amount of excess reserves in the banking system.
D) an expansionary policy because it raises the amount of required reserves in the banking system.
Ans: B) a contractionary policy because it lowers the amount of excess reserves in the banking system.
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Marginal utility theory predicts that
A) when the price of a good rises, the quantity demanded of that good decreases. B) if the price of one good rises, the demand for a substitute good increases. C) if income increases, the demand for a normal good increases. D) All of the above answers are correct because all are predictions of marginal utility theory.
If the dollar appreciates:
a. imports to the United States become more expensive for foreigners b. exports from the United States become more expensive for foreigners c. imports become more expensive for U.S. citizens. d. exports from the United States become cheaper e. the dollar will exchange for fewer units of a foreign currency
If the opportunity cost of producing more of one good remains the same as more of that good is produced, then the production method is inefficient
Indicate whether the statement is true or false
Changes in the money supply are ________ to other economic variables, and since the early 1990s the Fed has ________ in monetary policymaking
A) closely connected; emphasized the role of M2 over M1 B) closely connected; emphasized the role of M1 over M2 C) closely connected; emphasized the roles of both M1 and M2 D) no longer closely connected; deemphasized the roles of M1 and M2