Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 5%. In theoretical limit, the money supply could
A) decrease by $5 billion.
B) increase by $5 billion.
C) increase by $20 billion.
D) decrease by $20 billion.
C
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Equilibrium price and quantity are determined by the intersection of the demand and supply curves.
Answer the following statement true (T) or false (F)
According to this Application, after the government deceased cigarette taxes in several Canadian provinces in 1994, the decrease in the price of cigarettes in these provinces
A) increased the smoking rate by roughly 17 percent B) more than doubled the smoking rate. C) created no noticeable change in the smoking rate. D) was accompanied by a slight decrease in the rate of smoking.
Which of the following is true of scarcity?
a. It applies to raw materials; manufactured goods are not scarce. b. It affects all countries except the United States and Canada. c. It affects only poor nations. d. It is a basic problem of economics that affects all nations.
Most economists believe that classical theory describes the world
a. in the short run. b. in the long run. c. in both the short run and the long run. d. in neither the short run nor the long run.