If the Fed buys $10 million dollars in government bonds from a bank, and the legal reserve requirement is 20 percent, the banking system is able to expand the money supply by

If there are strong expectations of future economic growth, then the:

a. economy will move to the right along the existing consumption function. b. economy will move to the left along the existing consumption function. c. consumption function will shift downward. d. consumption function will shift upward. e. investment demand curve will shift upward.

In the mortgage securitization process, "tranching" means:

a. Separating mortgage cash flows into securities of varying risks and returns. b.Pooling risks by combining mortgages with high and low credit ratings. c. Creating a whirlpool of speculative activity by offering easy credit terms to borrowers who do not have the capacity repay their loans. d. Creating new incentives for families to own homes. e. None of the above.