Union leaders who focus on increasing the size of their union will generally accept a wage just above the competitive level.

If a group of economists believes the following points are true, which is likely to be their policy making stance?

? Aggregate demand shocks have no long run effect on real Gross Domestic Product (GDP) or unemployment. ? Pure competition is widespread throughout the economy. ? Real wages are flexible. ? The Phillips Curve trade-off does not exist in the long run. A) They will support discretionary policy making. B) They will support passive policy making. C) They will support active policy making. D) They will argue that any attempt at economic policy making is futile.

Explain how a currency drain affects the size of the money multiplier. In your explanation, suppose that a bank gains $1 million in new deposits and reserves

Further suppose that the desired reserve ratio is 10 percent and the currency drain is 50 percent.