The nominal interest rate cannot fall below A) the real ...

[Arii_bell]

The nominal interest rate cannot fall below
 
  A) the real interest rate.
  B) the rate of growth in the money stock.
  C) 2.
  D) zero.

Question 2

If the required reserve ratio is 10 and the Fed purchases 20 million worth of securities, what is the simple deposit multiplier and what happens to the amount of deposits in the banking system? Assume that banks do not hold excess reserves and the
 
  public does not change its currency holdings.

[enass]

Answer to Question 1

D

Answer to Question 2

The simple deposit multiplier is 1/0.10 = 10. The amount of deposits changes by 20 million  10 = 200 million.

[Arii_bell]

Thank you

[enass]

No problemo