In a simplified banking system with a 20 percent required reserve ratio, a $1,000 open-market sale by the Fed would cause the money supply to:
a. increase by $200 b. decrease by $200.
c. decrease by $5,000 d. increase by $5,000.
c
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At the best affordable point, consumers equate their marginal rates of substitution to
A) their money income. B) their real income. C) relative prices. D) relative quantities.
Define the following terms and explain their importance to the study of economics. a. price elasticity b. complements c. substitutes d. cross elasticity e. supply elasticity
What will be an ideal response?
The relative importance of housing in the breakdown of consumer spending is
a. 42 percent. b. 15 percent. c. 6 percent. d. 4 percent.
In Ithaca, NY, Ithaca Hours, valued at the area's average hourly wage ($10), can be used to buy goods and pay for services. About 5,700 Ithaca Hours are in circulation. Because they are accepted in local stores and accepted by local people as income, Ithaca Hours:
A. are money because they are backed by the local government. B. are not money because they do not serve as a medium of exchange. C. are not money because their value depends upon the area's average hourly wage. D. although less liquid than Fed Notes, are money because they are accepted as money.