Which of the following has proved to be spectacularly false, at least recently?
A. As an expansion proceeds, people will hold no more cash.
B. As an expansion proceeds, banks will hold no more excess reserves.
C. The oversimplified money multiplier formula is predicated on two critical assumptions.
D. All of the above are false.
Answer: B
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When young students are hungry, they can be disruptive and inattentive in class. Thus, providing lunch to students has external benefits. The figure above represents the market for school lunches before and after government vouchers are issued
a. What is the unregulated private market equilibrium? b. What is the efficient quantity of lunches? c. What is the amount of the voucher necessary to move the economy to the efficient number of lunches? d. When vouchers are used, what is the dollar price of the lunch that suppliers receive and what is the dollar price that consumers pay when the voucher is used?
An increase in the desired stock of housing would be caused by ________
A) an increase in household formation B) higher residential consumption C) a decrease in expected future income D) an increase in home prices