Suppose the Fed purchases $100 million of U.S. securities from security dealers. If the reserve requirement is 20 percent, the currency holdings of the public are unchanged, and banks have zero excess reserves both before and after the transaction, the total impact on the money supply will be a:
A. $100 million decrease in the money supply.
B. $100 million increase in the money supply.
C. $200 million increase in the money supply.
D. $500 million increase in the money supply.
Answer: D
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The components of aggregate expenditure that change when real GDP changes are known as
A) unplanned expenditure. B) induced expenditure. C) autonomous expenditure. D) changeable expenditure. E) planned expenditure.
In 1962, Michael Harrington argued in The Other America that there was chronic, severe poverty in America
a. True b. False Indicate whether the statement is true or false
Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the
a. demand is more inelastic than the supply. b. supply is more inelastic than the demand. c. government has required that buyers remit the tax payments. d. government has required that sellers remit the tax payments.
Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Refer to Situation 4-1. If no price controls had been in
place, the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been A) an increase in both price and quantity. B) an increase in price and a decrease in quantity. C) a decrease in price and an increase in quantity. D) a decrease in both price and quantity.