Increasing the reserve requirement reduces the money supply.
Answer the following statement true (T) or false (F)
True
Increasing the reserve requirement forces banks to hold more reserves that cannot be lent out, thereby slowing the money creation process.
You might also like to view...
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
We could try to use a powerful computer to construct a macroeconomic model including tens of thousands of demand and supply curves, for every market in the economy. This would not be a useful undertaking because
a. it would not be worth the increased level of complication and effort needed to collect all information b. the model would be simplistic c. the model would inevitably leave out important information d. the suggested prices would inevitably be wrong in each market e. the model would not be realistic
Refer to the table below. The market price of the product in the short run is:
Use the table below to answer the question for a purely competitive firm.
A. $40
B. $80
C. $120
D. $160
Which of the following is an example of product differentiation?
A. Two shampoos differ only in their labels, but consumers pay $0.20 more for the label they recognize. B. Mills produce softwood and hardwood, but the two are used for different purposes. C. Consumers substitute SUVs for cars because SUVs accommodate more passengers. D. Sugar can be made from sugar beets or sugar cane, and consumers cannot tell the difference.