A change in the required reserve ratio changes:
a. the amount of actual reserves in the banking system
b. the amount of excess reserves in the banking system.
c. the value of government securities held by the Fed.
d. the level of insurance for banks who are members of the FDIC.
b
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"The price elasticity of demand is a measure of how sensitive demanders are to changes in the price of a product." Is this statement true or false?
What will be an ideal response?
Which of the following is an example of an automatic fiscal policy action?
A) increased unemployment payments resulting from higher unemployment B) an increase in spending on defense goods resulting from increased world tensions C) an increase in the tax rate resulting from a desire to shrink the budget deficit D) a decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession E) None of the above answers is correct.