Suppose the Fed sells 10 million in government securities to a ...

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Suppose the Fed sells 10 million in government securities to a commercial bank. If the required reserve ratio is 0.2, what is the maximum amount by which checkable deposits in the banking system can change?
 a. +10,000,000
  b. 10,000,000
  c. +50,000,000
  d. 50,000,000
  e. +20,000,000

Question 2

Assume an economy is in equilibrium at a real GDP of 5 trillion. If aggregate expenditure (AE) increases by 1 trillion, the economy's equilibrium real GDP is likely to _____.
 a. increase by 1 trillion
 b. increase by more than 1 trillion
  c. increase by less than 1 trillion
  d. decrease by 1 trillion
 e. decrease by more than 1 trillion

[cassie_ragen]

Answer to Question 1

d

Answer to Question 2

b