An increase in the reserve requirement
A) increases the money supply, which leads to increased interest rates and a decrease in GDP.
B) decreases the money supply, which leads to increased interest rates and a decrease in GDP.
C) decreases the money supply, which leads to decreased interest rates and a decrease in GDP.
D) increases the money supply, which leads to decreased interest rates and a decrease in GDP.
B
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Which school of thought believes that real GDP always equals potential GDP?
A) only classical B) only Keynesian C) Monetarist D) both Keynesian and classical
Because of automatic stabilizers, _____
a. fiscal policy focuses on maintaining an annually balanced budget b. planning discretionary fiscal measures to reduce economic fluctuations is easy c. government budget deficits are zero if averaged out over the entire business cycle d. policy makers should be concerned less with balancing the budget annually e. government budget deficits are smaller during expansions and larger during contractions
For a perfectly competitive firm, price always equals marginal cost.
Answer the following statement true (T) or false (F)
A natural monopoly can purposely increase its cost of production by
A. Using government subsidies to offset losses. B. Keeping marginal costs low. C. Using its own unregulated subsidiary to inflate its cost. D. Substituting cheaper inputs.