Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve reduces the required reserve ratio to 4 percent, then the bank can make a maximum loan of

After a permanent increase in the money supply

A) the exchange rate overshoots in the short run. B) the exchange rate overshoots in the long run. C) the exchange rate smoothly depreciates in the short run. D) the exchange rate smoothly appreciates in the short run. E) the exchange rate remains the same.

For an economy to produce at a point beyond its current ppf, the economy must

A. increase its resource base. B. reduce inputs. C. be more efficient. D. waste less.