Author Question: If the required reserve ratio (RR) is 20 percent, the simple deposit multiplier is A) 2. B) 5. C) ... (Read 74 times)

madam-professor · **on:** Jun 29, 2018

If the required reserve ratio (RR) is 20 percent, the simple deposit multiplier is

A) 2. B) 5. C) 10. D) 20.

Question 2

Refer to Table 20-13. Consider a simple economy that produces only three products: tacos, earplugs, and toothbrushes. Use the information in the table to calculate the inflation rate for 2016, as measured by the consumer price index.

What will be an ideal response?

meltdown117 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

B

Answer to Question 2

Total expenditures for 2001 = (5 1.50 ) + (10 6.00 ) + (3 2.50 ) = 75.00.
Total expenditures for 2015 = (5 2.00 ) + (10 7.50 ) + (3 3.50 ) = 95.50.
Total expenditures for 2016 = (5 2.25 ) + (10 7.00 ) + (3 3.50 ) = 91.75.

The CPI for 2015= (95.50/75.00 ) 100 = 127.33
The CPI for 2016 = (91.75/75.00 ) 100 = 122.33.
So, the inflation rate for 2016 = ((122.33 127.33 )/127.33 ) 100 ) = 3.9.