A bank creates money when it:
a. gets new checkable deposits which the depositor formerly held as cash.
b. has a loan paid off, which creates excess reserves for the bank.
c. makes a loan from its excess reserves.
d. holds back excess reserves because of an increase in the required reserve ratio.
e. gets more excess reserves because of a decrease in the required reserve ratio.
c
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Refer to the above figure. An increase in aggregate demand between real Gross Domestic Product (GDP) levels Y0 and Y1
A) would not increase output since the economy is already working at full capacity. B) would have no effect on the price level. C) would cause price levels to fall. D) would most likely result in some inflation.
In the above figure, Mark's monthly budget line for movies and plays changed, as shown by the arrow. The change was caused by
A) a decrease in Mark's income. B) an increase in Mark's income. C) a fall in the price of a play. D) a rise in the price of a play.