If banks cannot lend all of their excess reserves,
a. the potential money multiplier increases
b. the actual money multiplier decreases
c. the potential money multiplier decreases
d. the amount of loans by the bank increases
e. demand deposits decrease
B
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Recall that the Cobb-Douglas Utility function U(X,Y) = XaY1-a has the unusual property that the demand for each good depends only on its own price
Therefore, a consumer will always allocate the same proportion of income to each good. Specifically, the demand for X is X* = aI/px where I is income and px is the price of X. a. What is the price elasticity of demand for X? b. What is the direction of the income effect on X of an increase in px?
Structural stagnation is used to describe a:
A. downturn, followed by a period of slow growth that is not expected to speed up anytime soon without major legal changes in the economy. B. downturn, followed by a period of slow growth that is not expected to speed up anytime soon without major structural changes in the economy. C. downturn, followed by a period of slow growth that is not expected to speed up anytime soon without major cyclical changes in the economy. D. downturn, followed by a period of slow growth that is not expected to speed up anytime soon without major political changes in the economy.