If the Federal Reserve sells $100 of securities through a commercial bank when the reserve requirement is 10 percent, the maximum potential change in the money supply is
A) a $1,000 increase. B) a $1,000 decrease. C) a $100 decrease. D) a $100 increase.
B
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Refer to Figure 15-10. In the figure above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Federal Reserve?
A) an open market sale of Treasury bills B) an open market purchase of Treasury bills C) an increase in income taxes D) a decrease in the required reserve ratio
Which measure of inflation best reflects changing prices for the average consumer?
A. Headline inflation B. Core inflation C. Hyper inflation D. Nominal inflation
All of the following, except one, help explain why specialization leads to greater production than is otherwise possible. Which is the exception?
a. It allows the organization of production in business firms. b. Specialization reduces the time lost in moving from one activity to another. c. As workers repeat an activity over and over, they hone their skills and become more expert. d. Specialization allows workers to be assigned to the activities for which they have the greater natural ability. e. The more often workers repeat an activity, the more stimulating and enjoyable they find it.
A car dealership estimates that the elasticity of demand for its top models is 0.5. If it raises its prices by 10%,
A. quantity demanded will decrease by 5% and total revenue will increase. B. there will be no change in either quantity demanded or total revenue because demand is inelastic. C. quantity demanded will decrease by 5% and total revenue will decrease. D. quantity demanded will decrease by 10% and total revenue will increase.