The marginal propensity to save (MPS) is computed as the change in:
a. savings divided by the change in saving.
b. savings divided by the change in disposable personal income.
c. saving divided by the change in GDP.
d. None of these.
b
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Quantitative easing refers to a policy action in which a central bank
A) sells government securities to directly decrease bank reserves. B) decreases interest rates directly without altering bank reserves. C) increases interest rates directly without altering bank reserves. D) buys government securities to directly increase bank reserves.
Everything else held constant, in the market for reserves, when the federal funds rate is 1%, increasing the interest rate paid on excess reserves from 1% to 2%
A) lowers the federal funds rate. B) raises the federal funds rate. C) has no effect on the federal funds rate. D) has an indeterminate effect on the federal funds rate.