Author Question: If the actual money multiplier equals the potential money multiplier and if the Fed wishes to reduce ... (Read 282 times)

MirandaLo · **on:** Jun 30, 2018

If the actual money multiplier equals the potential money multiplier and if the Fed wishes to reduce the money supply by 1 million when the reserve ratio is 20 percent, then the Fed should

A) sell 200,000 of government securities. B) sell 500,000 of government securities.
C) buy 200,000 of government securities. D) buy 500,000 of government securities.

Question 2

The production function displays

A) normal returns.
B) increasing returns.
C) diminishing returns.
D) average returns.
E) real returns.