If the required reserve ratio is 100 percent, could the Federal Reserve still change the money supply with open market operations? Explain whether they could or could not
What will be an ideal response?
The Federal Reserve could still change the money supply, because the initial purchase or sale of government securities would change checking account deposits. For instance, if the Fed purchases a $1,000 government bond from you and you deposit the funds in the bank, then checking account deposits and the money supply would go up $1,000. The simple deposit multiplier with a 100 percent required reserve ratio would equal one, not zero, so an increase in reserves still increases checking account deposits.
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The economist who proposed that, "Inflation is always and everywhere a monetary phenomenon" was
A) John Maynard Keynes. B) John R. Hicks. C) Milton Friedman. D) Franco Modigliani.
If, in addition to the least squares assumptions made in the previous chapter on the simple regression model, the errors are homoskedastic, then the OLS estimator is
A) identical to the TSLS estimator. B) BLUE. C) inconsistent. D) different from the OLS estimator in the presence of heteroskedasticity.
Computers and software programs are
a. inferior goods b. complementary goods c. goods with a cross-price elasticity of demand of 0 d. substitute goods e. perfectly elastic goods
Price elasticity of demand can be written as percentage change in Q divided by percentage change in P
a. True b. False Indicate whether the statement is true or false