Assume that the required reserve ratio is 25 percent. If the Federal Reserve sells $120 million in government securities to the general public, the money supply will immediately:
A. Decrease by $120 million with this transaction, and the decrease in money supply could eventually reach a maximum of $480 million
B. Decrease by $120 million with this transaction, and the decrease in money supply could eventually reach a maximum of $360 million
C. Increase by $120 million with this transaction, and the increase in money supply could eventually reach a maximum of $480 million
D. Increase by $120 million with this transaction, and the increase in money supply could eventually reach a maximum of $360 million
A. Decrease by $120 million with this transaction, and the decrease in money supply could eventually reach a maximum of $480 million
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Which of the following is a surplus item in the U.S. current account?
A) The U.S. government reduces the tariff rates on some imported goods. B) IBM pays dividends to British shareholders. C) Finn vodka becomes more popular in the United States. D) The U.S. government cuts back on military personnel stationed in S. Korea.
Under a fixed exchange rate? system, the central bank of a country experiencing a balance of payments deficit? will:
A) increase the supply of the domestic currency to prevent currency depreciation.
B) increase the demand for the domestic currency to prevent currency depreciation.
C) increase the supply of domestic currency to prevent a currency appreciation.
D) increase the demand for domestic currency to prevent a currency appreciation.
Refer to the information provided in Figure 6.10 below to answer the question(s) that follow.
Figure 6.10Refer to Figure 6.10. Kyle would increase his consumption of turkey sandwiches from 5 to 7 per week if their price fell from $8 to $6. This illustrates the idea of
A. technical efficiency. B. the law of diminishing marginal utility. C. consumer surplus. D. cross-price elasticity of demand.
Suppose the economy is at full employment with a high inflation rate. Which combination of government policies is most likely to reduce the inflation rate?
A. Buy government securities in the open market and increase taxes B. Buy government securities in the open market and decrease taxes C. Sell government securities in the open market and increase government spending D. Sell government securities in the open market and decrease government spending