Assuming that the reserve ratio is 0.05 the money multiplier is:
A. 10.
B. 20.
C. 40.
D. 30.
Answer: B
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A decrease in demand is represented by
a. a shift outward of the entire demand curve. b. a shift inward of the entire demand curve. c. a movement along the demand curve in a southeasterly direction. d. a movement along the demand curve in a northwesterly direction.
The short run for the industry is defined as a period
a. too brief for new firms to enter the industry. b. too brief for old firms to leave the industry. c. in which the number of firms in the industry is fixed. d. All of the above are correct.
Even as the U.S. government ran large budget deficits in the early 2000s, the interest rate did not rise substantially. Which of the following is among the reasons that crowding out did not raise interest rates at that time?
A. The Federal Reserve decreased the money supply. B. The government spent the borrowed money in such a way that productivity, and therefore the availability of savings, dramatically increased. C. Americans increased their willingness to save at the same time that the budget deficits appeared. D. Foreigners were willing to finance the U.S. deficit with their abundant supply of savings.
Suppose the economy starts off producing Natural Real GDP. Next, aggregate supply rises, ceteris paribus. As a result, the price level falls in the short run. In the long run, when the economy has moved back to producing Natural Real GDP, the price level will be
A) higher than it was in short-run equilibrium. B) lower than it was in short-run equilibrium but higher than it was originally (before aggregate supply rose). C) lower than it was originally (before aggregate supply rose). D) equal to what it was originally (before aggregate supply rose).