The silly clothes worn by a circus clown are an example of

Economic analysis indicates that the monetary policy of the 1930s, which shifted back and forth between restrictive monetary policy and expansionary monetary policy, would likely result in

a. economic stability and growth in real levels of output. b. keeping the general level of prices relatively stable because the periods of restrictive policy would just offset the periods of expansion. c. an environment of uncertainty, which would lead to economic instability. d. economic stability, because changes in monetary policy can be counted on to exert a predictable impact on the economy quickly.

Table 14.3Monetary Aggregates of the U.S. Financial SystemItemAmountCash held by public$40 billionTransactions deposits$80 billionRequired reserves$20 billionExcess reserves$0 billionU.S. bonds held by public$125 billionAssume an original balance sheet: In Table 14.3, if the Fed changes the required reserve ratio to 10 percent, the lending capacity of the system would eventually

A. Increase by $12 billion. B. Increase by $120 billion. C. Decrease by $120 billion. D. Decrease by $12 billion.