Inflation is a tax because as the government ________ the quantity of money, the price level ________, and the purchasing power of households' money ________.
A) does not change; rises; increases
B) increases; rises; increases
C) decreases; falls; decreases
D) increases; rises; decreases
E) decreases; rises; decreases
Question 2
The FUN Bank has no excess reserves when a new deposit of 20,000 is made. The desired reserve ratio is 5 percent. After the deposit, but before making any loans, how much does The FUN Bank have in excess reserves?
A) 19,000 B) 20,000 C) 1,000 D) 9,000 E) 21,000
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