If a bank uses $200 of excess reserves to make a new loan when the reserve ratio is 15 percent, this action by itself initially makes the money supply
a. and wealth increase by $200.
b. and wealth decrease by $200.
c. increase by $200 while wealth does not change.
d. decrease by $200 while wealth decreases by $200.
c
You might also like to view...
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
An economist claims that any point not on a production possibilities frontier cannot be best. What is his reasoning to support this?
A. A point inside the frontier implies that society is not facing up to the problem of scarcity. B. A point inside the frontier limits growth, and growth is always a goal worth pursuing. C. A point inside the frontier represents inflation, and inflation is a dangerous situation. D. A point inside the frontier results in fewer goods, and more is always better. E. A point inside the frontier is inefficient and represents wasted resources.
In the above figure, what is the marginal social cost to the economy of producing the four-hundredth pretzel?
A) $0 B) $2.00 C) $4.00 D) None of the above answers are correct.
When the economy is operating below full-employment capacity, a recessionary gap is said to exist
Indicate whether the statement is true or false