For any value of the MPC (marginal propensity to consume), the formula for the expenditure multiplier is
a. 1/(1 - MPC)
b. 1/MPC
c. 1/(MPC - 1)
d. (1 + MPC)/MPC
e. 1/(1 + MPC)
A
Economics
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Suppose the banks in the Federal Reserve System have $100 billion in transactions accounts, the required reserve ratio is 0.10, and there are no excess reserves in the system. If the required reserve ratio is changed to 0.15, the deficiency of reserves would be
A. $20 billion. B. $5 billion. C. $10 billion. D. $15 billion.
Economics
If full employment GDP is $1 trillion greater than the equilibrium GDP and the multiplier is 5, how much is the deflationary gap?
What will be an ideal response?
Economics