If the required reserve ratio decreases, the:
A. money multiplier increases.
B. money multiplier decreases.
C. amount of excess reserves the bank has decreases.
D. money multiplier stays the same.
Answer: A
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Expansionary monetary policy decreases the federal funds rate
Indicate whether the statement is true or false
Clarissa notices that her satellite TV signal becomes scrambled whenever there is a major thunderstorm in her area. She concludes that the scrambled satellite signal must be causing the severe thunderstorms. Clarissa is
A. likely correct that there is causation, but the causation is more likely running in the opposite direction in that the severe thunderstorms are the cause of the scrambled satellite signal. B. probably misguided in that there is no apparent correlation or causation in this situation. C. very probably correct in her conclusion that the scrambled satellite is the cause of the thunderstorms. D. definitely confusing correlation with causation.