17) The IS curve will shift when which of the following occurs?
A) a reduction in output.
C) a reduction in consumersʹ confidence.
B) a reduction in interest rate. D) a reduction in money supply.
18) When a liquidity trap situation exists, the most appropriate
policy to increase output would be
A) a central bank purchase of bonds. B) an increase in government
purchase. C) a central bank sale of bonds. D) none of the above
19) Which of the following will cause the money multiplier to
become smaller?
A) an increase in the publicʹs preference for checking deposits as
opposed to holding currency
B) an increase in the ratio of reserves to checkable deposits C)
an increase in high powered money
D) a reduction in high powered money
E) none of the above
20) When a customer withdraws money from her checking account at a commercial bank, the bankʹs assets ________ and its liabilities ________.
A) increase; decrease B) increase; increase C) decrease; decrease D) decrease; increase
a) "C"
A reduction in the consumer confidence will shift the IS curve.
b) "B"
an increase in the government purchases will shift the output in case of liquidity trap in the market.
c) "A"
Public holding more money in the market will decrease the money multiplier in the market.
d) this will decrease the cash that is an asset and it will also decrease the liability, the answer is "C".
17) The IS curve will shift when which of the following occurs? A) a reduction in...
13) An open market purchase of bonds by the central bank will cause which of the following when a liquidity trap situation exists? A) The money supply, M, will not change. B) Output will increase. C) The interest rate will decrease. D) The interest rate will not change. E) none of the above 14) Which of the following is a liability on a bankʹs balance sheet? A) loans B) checkable deposits C) reserves D) all of the above E) none...
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The LM curve represents A) the single level of output where the goods market is in equilibrium. B) the combinations of output and the interest rate where the goods market is in equilibrium. C) the single level of output where financial markets are in equilibrium. D) the combinations of output and the interest rate where the money market is in equilibrium. E) none of...
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The LM curve represents A) the single level of output where the goods market is in equilibrium. B) the combinations of output and the interest rate where the goods market is in equilibrium. C) the single level of output where financial markets are in equilibrium. D) the combinations of output and the interest rate where the money market is in equilibrium. E) none of the...
9) Which of the following is included as a component of the M2 definition of money? A) travelers check B) small time deposits C) checkable deposits D) all of the above E) none of the above 10) Which of the following generally occurs when a central bank pursues contractionary monetary policy? A) the central bank sells bonds and the interest rate decreases. B) the central bank purchases bonds and the interest rate increases. C) the central bank sells bonds and...
# 74 ... mocy uemand curve and a lettward shift in the money supply curve C) a leftward shift in the money demand curve and a rightward shift in the money supply curve. D) a rightward shift in the money demand curve and a rightward shift in the money supply curve E) none of the above ******74) Suppose a one-year discount bond offers to pay $100 in one year and currently sells for $99. Given this information, we know that...
Ml equals currency + demand deposits + A)nothing else B)othere checkable deposits. C)traveler's checks + other checkable deposits. D)traveler's checks + other checkable deposits -+ savings deposits 2. If you deposit $100 of currency into a demand deposit at a bank, this action by itself A)does not change the money supply. B)increases the money supply. C)decreases the money supply. D)has an indeterminate effect on the money supply. 3. The manager of the bank where you work tells you that your...
explain and draw the use of easy monetary policy on the AD-AS model explain what occurs when The Fed "buys bonds" 1. You are given this account for a bank Assets Liabilities Reserves $450 Deposits $3000 Loans $2550 The required reserve ratio is 10% a. How much is the bank required to hold as reserves given its deposits of $3000? b. How much are its excess reserves? c. By how much can the bank increase its loans? d. Suppose a...
Question 4 0.2 pts When a liquidity trap situation exists, the most appropriate policy to increase output would be: a central bank purchase of bonds. an increase in government spending. O an increase in taxes. a central bank sale of bonds. a decrease in government spending.
The total money supply M has two components: bank deposits D and cash holdings C which we assume to bear a constant ratio C/D money H is defined as the sum of cash holdings held by the public and the reserves held by the banks. Bank reserves are a fraction of bank deposits, determined by the reserve ratio r, 0 <r<1 c, 0 < c< 1. The high-powered (a) Express the money supply M as a function of high-powered money...
1. A balance sheet indicates insolvency when A. Its capital exceeds its liabilities B. Its assets exceeds its liabilities C. Its liabilities exceeds its assets D. Its capital is less than its liabilities 2. Which of the following is an asset on a bank’s balance sheet? A. Capital B. Checkable deposits C. Loans D. None of the previous 3. The share of checkable deposits as a percentage of a bank’s liabilities has? A. Expanded moderately over time B. Expanded dramatically...