If a bank's deposits at the Fed increase by $10 million, then
A) both the bank's liabilities and the Fed's liabilities increase by $10 million.
B) the bank's assets increase by $10 million, but there is no change at the Fed since it does not really have assets or liabilities.
C) the bank's assets increase by $10 million and the Fed's liabilities increase by $10 million.
D) both the bank's assets and the Fed's assets increase by $10 million.
C
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Suppose that business firms spend $500 million on new capital equipment this year. Of this $500 million, $300 million was spent on domestically produced capital and $200 million was spent on foreign-produced capital
All else equal, these transactions contribute ________ to GDP. A) $500 million B) $300 million C) $800 million D) $200 million E) $0
If the nominal money supply grows 6%, real income rises 2%, and the inflation rate is 5%, then the income elasticity of money demand is
A) 0.5. B) 0.75. C) 1.0. D) 1.5.