The multiple by which the commercial banking system can increase the supply of money on the basis of each dollar of excess reserves is equal to:
A. the reciprocal of the required reserve ratio.
B. 1 minus the required reserve ratio.
C. the reciprocal of the income velocity of money.
D. 1/MPS.
A. the reciprocal of the required reserve ratio.
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If an individual firm in a market is a price taker, then:
a. it faces a horizontal demand curve. b. it is operating in a monopolistically competitive market. c. it sells its product at the market price that is solely determined by the buyers. d. it faces a positively sloped marginal revenue curve. e. it faces significant barriers to exit from the market.
Which of the following reflects the incentive structure confronted by a typical firm in a cartel?
a. If I alone cheat, I'm better off; if everyone cheats, I'm worse off. b. I can never do better for myself than by following agreed-upon cartel policies. c. If everyone cheats, I'm better off and so is everyone else in the cartel. d. If I suspect others are planning to cheat, I'll do best for myself by deciding not to cheat.