The primary cause of the reduction in the nominal money supply during the early years of the Great Depression was
A) the Fed's sale of bonds.
B) the Fed's purchase of bonds.
C) a reduction in the money multiplier.
D) none of the above
C
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All else equal, an increase in the rate of inflation ________ aggregate spending and ________ short-run equilibrium output.
A. increases; decreases B. increases; increases C. decreases; decreases D. decreases; increases
A bank has excess reserves of $6,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess reserves will be
A) -$5,000. B) -$1,000. C) $1,000. D) $5,000.
Assume the Federal Reserve increases the required reserve ratio from 10 to 20 percent and reserves are $80 billion. Then the change in the money supply will be
a. $80 billion. b. $20 billion. c. $400 billion. d. $800 billion. e. none of the above
Which of the following would tend to increase the value of a future stream of income?
a. an increase in the rate of inflation b. an increase in the interest rate c. a reduction in the interest rate d. a reduction in the size of the expected future income