Suppose the Federal Reserve increases bank reserves and banks lend out some of these reserves, but at some point banks still have $5 million more they wish to lend out. If the reserve requirement is 10 percent, how much more money can banks create if they lend out the remaining amount?
a. $55 million
b. $50 million
c. $45 million
d. $40 million
b
You might also like to view...
An increase in labor productivity ________ the real wage rate and an increase in population ________ the real wage rate
A) raises; lowers B) raises; raises C) lowers; lowers D) lowers; raises
Real estate suitable for condominium development is also suitable for single-family home development. Therefore, a rise in the price of condominiums relative to single-family homes tends to
A) increase the opportunity cost of building new single-family homes.
B) reduce the demand for condominiums.
C) increase the demand for condominiums.
D) do none of the above.
In a three-player game, if the game is symmetric and one player does not have a dominant strategy, then the other two players also have no dominant strategy
Indicate whether the statement is true or false
Suppose the money supply grows at an annual rate of 10%, real GDP grows at 4%, the growth rate of velocity is 0%, and the expected real interest rate on Aaa corporate bonds averages 5.5%
Use the Fisher equation to determine the nominal interest rate on Aaa bonds. What will happen to the nominal interest rate in the long run if the growth rate of the money supply decreases to 7%?