Assume the M2 multiplier is 3 and the reserve ratio is 10%. If the central bank buys $100 million of government securities from banks, the banking system's reserves will:
a. Rise by $10 million.
b. Rise by $100 million.
c. Fall by $100 million.
d. Fall by $10 million.
e. Not change.
.B
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Answer the next question based on the following list of factors that are related to the aggregate demand curve. 1) Real-Balances Effect2) Household Expectations3) Interest-Rate Effect4) Personal Income Tax Rates5) Profit Expectations6) National Income Abroad7) Government Spending8) Foreign Purchases Effect9) Exchange Rates10) Degree of Excess CapacityA change in net export spending would most likely be caused by changes in ________.
A. 5 and 6 B. 2 and 3 C. 7 and 8 D. 6 and 9
Structural unemployment exists because something is holding wages
A) naturally high. B) artificially high. C) naturally low. D) artificially low.
Which of following is the best example of a monopoly if we use a broader definition of monopoly?
A) Santos Tacos, the only taqueria in the small town of Santosville B) Cheap Gas, one of two gasoline stations in a large rural community C) Spuds McKenzie, a wealthy potato farmer in Idaho D) Zippie Rentals, a sports car rental service in the downtown Boston area
Profits and losses are true signals because they
A) convey information about true long-run profits. B) cannot be misinterpreted by entrepreneurs. C) convey information about where to place resources and reward people who act on the information. D) reward people who make profits with even more profits and punish those who make losses with even more losses.