Assume all banks in the system started have a 10 percent required reserve ratio and the Fed made a $20,000 open market purchase. The result would be a(n):
a. $200,000 expansion of the money supply.
b. $20,000 expansion of the money supply.
c. $20,000 contraction of the money supply.
d. infinite contraction of the money supply.
a
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If the price of cappuccino on campus falls from $5 to $3 and the quantity demanded increases from 15 to 20, then the price elasticity of demand is approximately
A) 0.47, which mean cappuccino is inelastic. B) 0.57, which means cappuccino is inelastic. C) 1.75, which means cappuccino is elastic. D) 2.25, which means cappuccino is elastic.
If Treasury deposits at the Fed are predicted to increase, the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves
A) defensive; inject B) defensive; drain C) dynamic; inject D) dynamic; drain
The logical (and sometimes illogical) shortcuts that people derive from experience which economize on their mental capabilities are called:
a. irrationalities. b. heuristics. c. statistical errors. d. probabilities.
Explain what will happen in the market for pagers as the technology used to produce them improves at the same time that the price of cellular phones decreases