Which of the following is correct?
a. A bank's deposits at the Federal Reserve counts as part of the bank's reserves. The Federal Reserve pays interest on these deposits.
b. A bank's deposits at the Federal Reserve counts as part of the bank's reserves. The Federal Reserve does not pay interest on these deposits.
c. A bank's deposits at the Federal Reserve does not count as part of the bank's reserves. The Federal Reserve pays interest on these deposits.
d. A bank's deposits at the Federal Reserve does not count as part of the bank's reserves. The Federal Reserve does not pay interest on these deposits.
a
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If the government increases expenditures on goods and services and increases taxation by the same amount, which of the following will occur?
a) aggregate demand will be unchanged b) aggregate demand will increase c) interest rates will decrease d) the money supply will decrease e) the money supply will increase
Identify the ways in which each of the following determinants would have to change if each was causing a decrease in aggregate demand: consumer wealth, consumer expectations, business taxes, national income in countries abroad, exchange rates.
What will be an ideal response?