If the money multiplier is 10, the purchase of $1 billion of securities by the Fed on the open market causes a
A. $1 billion increase in the money supply.
B. $10 billion decrease in the money supply.
C. $1 billion decrease in the money supply.
D. $10 billion increase in the money supply.
Answer: D
You might also like to view...
Which of the following would not act as an automatic stabilizer?
A) Unemployment insurance B) Government purchases C) Personal income taxes D) Corporate income taxes
A grocery store cannot sell Campbell Soup if it also sells other brands of soup. This is an example of:
a. resale price maintenance. b. territorial restrictions. c. a tying agreement. d. exclusive dealing.
Demand is best defined as the:
A) amount of a commodity that buyers would be willing and able to purchase at a specific price. B) price that buyers would be willing and able to pay for a specific quantity of a good. C) relationship between the price of a good and the quantity people are able to purchase, all other things unchanged. D) relationship between the price of a good and the quantity people are willing and able to purchase, all other things unchanged.
Which is considered a strength of monetary policy compared to fiscal policy?
What will be an ideal response?