If the Fed were to impose a slight increase in the required reserves ratio, there would be _____.
(A) No change in the money supply.
(B) An increase, then a decrease, in the money supply.
(C) An increase in the money supply.
(D) A decrease in the money supply.
Ans: (D) A decrease in the money supply.
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What do Fannie Mae and Freddie Mac have in common?
A) They are both investment banks. B) Both firms issue bonds on behalf of the government. C) Both firms went out of business in the 2008 financial crisis. D) They are both pension funds. E) They are both government-sponsored mortgage lenders.
Milton Friedman and Edmund Phelps questioned
A) the use of expectations in the Phillips curve. B) the stability of the relationship between inflation and unemployment. C) the existence of a natural rate of unemployment. D) the existence of a full-employment level of output.
Economists assume people behave rationally, which means that people
A) never make a mistake. B) do not intentionally make decisions that make themselves worse off. C) have the necessary information to always make correct decisions. D) always understand the consequences of their decisions.
Economists criticize Robinson-Patman acts because
a. Economists are profit maximizers b. Economists promote unemployment c. Economists are against discounting of goods d. Economists feel the act protects competitors rather than the process of competition