Author Question: Traditional classical economists believe that: a. wage rates are perfectly flexible. b. people do ... (Read 59 times)

jCorn1234 · **on:** Jun 30, 2018

Traditional classical economists believe that:
a. wage rates are perfectly flexible.
b. people do not have perfect information about the economy.
c. prices are fixed for long periods of time.
d. the price of resources, technology, and expectations cannot influence the equilibriumlevel of real GDP.
e. changes in aggregate demand change only the real GDP.

Question 2

Which of the following is false?
a. The Fed controls the supply of money, even though privately owned commercial banks actually create and destroy money by making loans.
b. With a 10 required reserve ratio, a 10,000 cash deposit in a bank would result in an increase in the bank's excess reserves by 1000.
c. With a 10 required reserve ratio, a 1,000 bond purchase by the Fed directly creates 1,000 in money in the form of bank deposits, and indirectly permits up to 9,000 in additional money to be created through the multiple expansion in bank deposits.
d. When the Fed sells government bonds, it will tend to cause a multiple contraction of bank deposits.