If the required reserve ratio is 100 percent, could the Federal Reserve still change the money supply with open market operations? Explain whether they could or could not
What will be an ideal response?
The Federal Reserve could still change the money supply, because the initial purchase or sale of government securities would change checking account deposits. For instance, if the Fed purchases a $1,000 government bond from you and you deposit the funds in the bank, then checking account deposits and the money supply would go up $1,000. The simple deposit multiplier with a 100 percent required reserve ratio would equal one, not zero, so an increase in reserves still increases checking account deposits.
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Which of the following models argue that active stabilization policy can be beneficial?
a. The classicists b. The new classicists c. The monetarists d. The real business cycle theorists e. None of the above
Which of the following will improve your bargaining position when contracting with a supplier
a. You are better able to accommodate other suppliers' brands b. You must only buy the raw material from your preferred supplier to ensure quality c. Two of your suppliers merge d. Your final product that includes this component becomes more profitable