One of the major weaknesses of the Federal Reserve Bank of St. Louis econometric model was that it
A) was large and cumbersome.
B) was limited to analyzing an economy with substantial unemployment.
C) did not specify the categories of private spending that were affected by monetary policy.
D) included a government spending multiplier that was clearly too high.
C
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Suppose checking deposits increase by $6,000 after all rounds of the money-creation process when the Fed buys $1,200 worth of U.S. government securities. This implies that the maximum value of the required reserve ratio is: a. 5
b. 0.75. c. 0.2. d. 1.2. e. 1.0.
A direct relationship occurs when
A) the two variables being compared change in opposite directions, or when one goes up the other goes down. B) a change in one of the variables causes a change in the other variable in any direction. C) the two variables being compared change in the same direction, or when one goes up the other also goes up. D) the two variables have no identifiable relationship with each other.