Assume a money multiplier of 2. If the Treasury finances a $10 million expenditure by selling securities to the Fed, bank reserves will
A) remain unchanged.
B) rise by $5 million.
C) rise by $10 million.
D) rise by $20 million.
C
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Refer to Table 8-15. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2015 equals
A) 94.1. B) 105.1. C) 106.2. D) 108.5.
The marginal propensity to consume describes ________
A) the tendency to consume fringe, or unusual items B) the impact of a change in spending on income C) the impact on consumption resulting from a change in income D) lifetime consumption resources
In the price system
A. prices are set by the interaction of supply and demand. B. consumers alone set the price. C. producers alone set the price. D. prices are set by government action.
The problem of asymmetric information that brings about a general decline in product quality in an industry is
A. the lemons problem. B. a market failure. C. the result of government regulation. D. creative response.