Author Question: Say the required reserve ratio is 20 percent. If you pay back a loan of 10,000 a bank had previously ... (Read 27 times)

abarnes · **on:** Jun 30, 2018

Say the required reserve ratio is 20 percent. If you pay back a loan of 10,000 a bank had previously made to you, the act of paying back the loan:
a. adds 2,000 in bank reserves.
b. adds 10,000 in bank reserves.
c. eliminates 2,000 in bank reserves.
d. eliminates 10,000 in bank reserves.

Question 2

According to the long-run Phillips curve, which of the following will be the end result of an expansionary monetary policy when unemployment is at its natural rate?
a. Zero inflation
b. Deflation
c. A constant level of potential real GDP
d. A decrease in unemployment
e. An increase in unemployment