The supply-side economists expect that a cut in the marginal income tax rate, with lost revenues made up by a cut in government spending, would

Which of the following is false?

a. The Fed controls the supply of money, even though privately owned commercial banks actually create and destroy money by making loans. b. With a 10% required reserve ratio, a $10,000 cash deposit in a bank would result in an increase in the bank's excess reserves by $1000. c. With a 10% required reserve ratio, a $1,000 bond purchase by the Fed directly creates $1,000 in money in the form of bank deposits, and indirectly permits up to $9,000 in additional money to be created through the multiple expansion in bank deposits. d. When the Fed sells government bonds, it will tend to cause a multiple contraction of bank deposits.

In the mainstream view, the crowding-out effect from the use of fiscal policy is:

A. Small, especially during a recession B. Large, especially during a recession C. Large because the velocity of money is high D. Small because the velocity of money is low