What would happen if banks decided to stop lending altogether and instead held on to enormous amounts of cash?
A. The tools of monetary policy would become less effective in response to high inflation.
B. This would not impact the effectiveness of monetary policy.
C. The tools of monetary policy would become more effective in response to a recession.
D. The tools of monetary policy would become less effective in response to a recession.
Ans: D. The tools of monetary policy would become less effective in response to a recession.
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Everything else held constant, when real estate prices are expected to decrease
A) the demand curve for bonds shifts to the left and the interest rate rises. B) the demand curve for bonds shifts to the left and the interest rate falls. C) the demand curve for bonds shifts to the right and the interest rate falls. D) the supply curve for bonds shifts to the right and the interest rate falls.
Another term for an economic variable whose value is given is ________
A) endogenous B) exogenous C) autonomous D) ornamental
The banking system currently holds $20 billion in required reserves and zero excess reserves. The Fed lowers the required reserve ratio from 15 percent to 12.5 percent. Assuming that there are no cash leakages, the resulting change in checkable deposits (or the money supply) is approximately
A) $2.7 billion. B) $1.5 billion. C) $2.0 billion. D) $12.5 billion. E) $26.6 billion.
Technological change is _____________ for economic growth than additional capital
Fill in the blank(s) with the appropriate word(s).