Assume that the currency—deposit ratio is 0.5. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. This action increased the money supply by $2 million. What is the reserve—deposit ratio?
A) 0.25
B) 0.35
C) 0.40
D) 0.50
A
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An economic expansion rather than a recession occurs
A) when the federal budget is balanced. B) when the unemployment rate falls below 5 percent. C) when growth in real GDP is positive. D) when the unemployment rate is not changing.
In repeated games:
A. players no longer need commitment strategies to reach a mutually beneficial equilibrium. B. players will never reach a mutually beneficial equilibrium. C. there are no dominant strategies. D. negative-negative outcomes are the only outcomes possible.
Briefly explain why payroll taxes are a regressive tax.
What will be an ideal response?
In Macroland, currency held by the public is 2,000 econs, bank reserves are 300 econs, and the desired (and current) reserve/deposit ratio is 15 percent. If commercial banks borrow 100 econs in reserves from the Central Bank through discount window lending, then the money supply in Macroland will ________, assuming that the public does not wish to change the amount of currency it holds.
A. increase to 3,133 econs B. increase to 4,100 econs C. decrease to 1,900 econs D. increase to 4,667 econs