Assuming all excess reserves are loaned out, if the reserve ratio is 1 percent, the money multiplier will be equal to:
A. 1.
B. 10.
C. 11.
D. 100.
Answer: D
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What economic concepts are represented in the production possibilities model?
What will be an ideal response?
The money supply in an economy declines when, other things equal, _____
a. government spending exceeds borrowing b. government borrowing exceeds tax revenues and there is a deficit c. government borrowing exceeds the government deficit d. government spending exceeds tax revenues e. government spending exceeds borrowing and there is a surplus
Figure 3-5
In , if the initial demand for margarine were D1, an increase in the price of butter, which is a substitute for margarine, would tend to cause which of the following changes in the market for margarine?
a.
a shift in the demand curve from D1 to D2
b.
a shift in the demand curve from D2 to D1
c.
a movement along demand curve D1 from a to b
d.
a movement along demand curve D1 from b to a
Which of the following would make the spending multiplier smaller?
A) a reduction in marginal propensity to save B) a small initial trade deficit C) a reduction in the marginal propensity to import D) a real appreciation E) none of the above