If the required reserve ratio is 10% and the Fed purchases $20 million worth of securities, what is the simple deposit multiplier and what happens to the amount of deposits in the banking system? Assume that banks do not hold excess reserves and the
public does not change its currency holdings.
The simple deposit multiplier is 1/0.10 = 10. The amount of deposits changes by $20 million × 10 = $200 million.
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According to the Keynesian model, the short-run aggregate supply (SRAS) curve is horizontal when
A) prices react to an aggregate demand shock but real Gross Domestic Product (GDP) does not. B) there are no unemployed resources and wages do not change when prices change. C) there are unemployed resources and prices do not fall when aggregate demand falls. D) real Gross Domestic Product (GDP) is at full capacity but prices are not flexible.
Those individuals who rejected the U.S. tariff policy of the antebellum period did so for which of the following reasons? They
(a) Wanted to save domestic jobs in those industries reliant on imports. (b) Depended on imports for domestic production. (c) Wanted to protect relatively low consumer prices, advance free trade and boost economic efficiency. (d) All of the above.
In recent years, the Chinese government's actions have had an impact on interest rates in the United States
Indicate whether the statement is true or false
Health savings accounts (HSAs) implemented by the 2003 Medicare law:
A. are only available to those enrolled in Medicare. B. allow workers to accumulate untaxed dollars for payment of qualified medical expenses. C. are criticized because they require workers to "use it or lose it" each year; workers are not allowed to accumulate balances over time. D. can only be used to pay for prescription drugs.