Why does the money multiplier measure potential money creation rather than guaranteed money creation?
a. Borrowers may spend all the money they acquire through a loan.
b. The money is not real until it is deposited or spent.
c. Some banks may choose to keep some of their new deposits in their reserves.
d. Borrowers may deposit their loan money into checkable rather than demand deposits.
c. Some banks may choose to keep some of their new deposits in their reserves.
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The labor demand curve is:
A) upward sloping. B) vertical. C) horizontal. D) downward sloping.
Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand function is Q = 20,000 - 400P, where P is the price, in dollars, of a cubic yard of concrete and Q is the number of cubic yards sold per year. What is the difference between price and marginal revenue when KGC sells 5,000 cubic years of concrete per year?
A. $12.50 B. $25.00 C. $37.50 D. $50.00
Why might the Federal Reserve take an action that reverses expansionary fiscal policy?
A. In order to fight the unemployment caused by the expansionary fiscal policy B. In order to fight the deflation caused by the expansionary fiscal policy C. In order to fight the inflation caused by the expansionary fiscal policy D. To demonstrate its independence from the government
One of the timing problems with fiscal policy is an "operational lag" that occurs between the:
A. time the need for fiscal action is recognized and the time that action is actually taken. B. beginning of a recession and the time that it is recognized that the event is occurring. C. time that fiscal action has an impact on output, employment, and the price level and the time by which it can be determined if the policy is effective. D. time that fiscal action is taken and the time that action has an impact on output, employment, and the price level.