Suppose the required reserve ratio is 10%, excess-to-deposit ratio is 10%, and the currency-to-deposit ratio is 20%. If the Fed buys $50 million worth of securities, what will happen to the money supply?
What will be an ideal response?
The money multiplier is (1 + 0.2 )/(0.2 + 0.1 + 0.1 ) = 3. The money supply will increase by 3 × $50 million = $150 million.
Economics
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What is a problem with barter that makes it so difficult to use?
A) Individuals have to produce something to trade with. B) Barter omits the store of value role for money. C) Barter requires use of only fiat money. D) Barter requires a double coincidence of wants. E) Barter is very efficient but illegal because it avoids taxation.
Economics
If the supply of a good decreases and it causes total revenue to increase, this shows that the good has an
A) inelastic demand. B) elastic demand. C) unit elastic demand. D) inelastic supply. E) elastic supply.
Economics