If consumers decide to increase their rate of saving, the

Under purely flexible exchange rates,

A) there is no intervention by the domestic fiscal or monetary authorities to specifically target the nominal exchange rate. B) there is only occasional intervention by the domestic fiscal or monetary authorities to specifically target the nominal exchange rate. C) the domestic fiscal and monetary authorities retain considerable flexibility to prevent short-run variability in the nominal exchange rate. D) the domestic fiscal and monetary authorities retain considerable flexibility to prevent long-run variability in the nominal exchange rate.

The money-creation formula is oversimplified because it assumes that

A. every recipient of a bank loan will redeposit the proceeds in another bank. B. loan recipients will not take any of the proceeds in cash. C. every bank lends out all excess reserves. D. All of these responses are correct.