The money supply is $12.5 million, currency held by the nonbank public is $2.5 million, and the reserve—deposit ratio is 0.25
(a) What is the quantity of bank deposits?
(b) What is the quantity of bank reserves?
(c) What is the quantity of the monetary base?
(d) What is the money multiplier (give a number)?
(a) Since M = C + D, D = $10 million.
(b) Since R = 0.25 × D, R = $2.5 million.
(c) BASE = C + R = $5 million.
(d) multiplier = M/BASE = 2.5.
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Which combination of government policies would be most likely increase labor demand?
a. Increasing subsidies to education and increasing subsidies to businesses for hiring new employees b. Reducing income tax rates and cutting transfer payments to the needy c. Raising income tax rates and cutting transfer payments to the needy d. Reducing subsidies to education and increasing subsidies to businesses for hiring new employees e. Increasing subsidies to education and reducing subsidies to businesses for hiring new employees.
Use the graph below to answer the next question.
Other things equal, a decrease in the price of computers would cause a
A. move from a to b on D1 for computer programmers. B. shift from D3 to D2 for computer programmers. C. shift from D2 to D3 for computer programmers. D. move from b to a on D1 for computer programmers.