Lowering the legal reserve requirement might not result in an increase in the money supply if
a. tax rates are also lowered at the same time
b. tax rates are increased at the same time
c. borrowers are unwilling to borrow the new funds the banks have available for loans
d. borrowers are willing to borrow the new funds the banks have available for loans
e. borrowers expand their borrowing because of the lower interest rates that banks offer
C
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The price elasticity of demand for a good measures the responsiveness of:
A. price to a 1 percent change in the quantity demanded of that good. B. price to a 1 percent change in the demand for that good. C. quantity demanded to a 1 percent change in price of that good. D. demand to a 1 percent change in price of that good.
Starting from potential output, if consumer confidence decreases and consumers decide to spend less, then this will generate a(n) ________ gap and inflation will ________.
A. recessionary; increase B. expansionary; increase C. expansionary; decrease D. recessionary; decrease