A single bank is limited in its ability to create money because
A. loan recipients usually take the proceeds of the loan in cash.
B. the FDIC will not permit it to create money unless the loans are guaranteed by the federal government.
C. the money loaned will probably be deposited in another bank.
D. federal legislation prohibits banks from creating money except to finance international trade.
Answer: C
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In the case where the LM schedule is relatively steep and the IS schedule is relatively flat, the most effective policy would be a change in
a. money supply. b. government expenditures. c. government spending financed by a change in taxes. d. taxes.
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Assuming supply is held constant, an increase in demand for a product will cause an increase in the equilibrium price and the amount bought and sold
a. True b. False Indicate whether the statement is true or false