A decrease in net taxes:
a. increases GDP as much as an equal decrease in government purchases.
b. increases GDP less than an equal increase in government purchases.
c. decreases GDP more than an equal decrease in government purchases.
d. changes GDP in an unpredictable manner

Discretionary monetary policy is monetary policy that is based on

A) the judgment of Congress about the current needs of the economy. B) the judgment of the monetary policymakers about the current needs of the economy. C) the ups and downs of the stock market. D) a rule that allows no discretion in how policymakers respond to the state of the economy. E) rules that depend upon the state of the economy.

Assume that the required reserve rate is ten percent, banks want to hold excess reserves in an amount that equals three percent of deposits, and the public withdraws ten percent of every deposit in cash. An open market purchase of $1 million by the Fed will see banking system deposits increase by:

A. more than $1 million but less than $10 million. B. more than $10 million but less than $20 million. C. less than $1 million. D. exactly $1 million.