The banking system currently has $100 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed lowers the reserve requirement to 5 percent and at the same time buys $10 billion worth of bonds, then by how much does the money supply change?
a. It rises by $200 billion.
b. It rises by $800 billion.
c. It rises by $1,200 billion.
d. None of the above is correct.
c
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Which of the following will not cause a shift in the medical care supply curve?
a. a change in the cost of medical school tuition. b. a change in the percentage of the population with health insurance. c. an change in the amount of student aid available to promising undergraduate students studying biology. d. A change in the number of high-profile medical malpractice lawsuits brought against physicians increasing the premiums on malpractice insurance. e. A wave of union activity that increases the average salaries of nurses nationwide.
The marginal propensity to consume is
a. the fraction of an increase in income that would be spent on consumer goods. b. the additional desire people have for consumer goods. c. the fraction of a person’s total income normally spent for consumer goods. d. the change in consumption resulting from a $1 change in the price level.