If required reserves are expressed by RR; the required reserve rate by rD and deposits by D, the simple deposit expansion multiplier is expressed as:
A. 1/rD.
B. RR × D.
C. RD × D.
D. (1/rD ) D.
Answer: A
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If nation A has an absolute advantage over nation B in the production of a product, this implies that:
a. it requires fewer resources in A to produce the good than in B. b. the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B. c. nation B could not benefit by engaging in trade with A. d. nation A should acquire this product by trading with B. e. nation A could not benefit by engaging in trade with B.
The Board of Governors of the Federal Reserve serves on a larger policy-making group called the House Banking Committee
Indicate whether the statement is true or false
When the United States imposed a tariff on imported shrimp, a Vietnamese official said: "If the tariffs are imposed, that will mean fewer shrimp for the U.S. market and higher prices for consumers. So the U.S. government position hurts its own people. That's irrational." The imposition of tariffs by the United States in this case illustrates:
A. the good/bad paradox that what is good economics is always bad politics and vice versa. B. that U.S. consumers are either irrational or altruistic because they are willing to pay higher prices to help the U.S. shrimp industry. C. what the text calls the general rule of political economy, which states that often small interest groups lobby better than large groups. D. that the U.S. government, like all governments, is sometimes irrational.
Real income for a given year would be less than nominal income in that year if:
A. the consumer price index was less than 100 in that year. B. nominal income in that year was greater than nominal income in the previous year. C. nominal income in that year was less than nominal income in the previous year. D. the consumer price index was greater than 100 in that year.