This topic contains a solution. Click here to go to the answer

Author Question: The nominal interest rate cannot fall below A) the real interest rate. B) the rate of growth in ... (Read 143 times)

Arii_bell

  • Hero Member
  • *****
  • Posts: 596
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.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

enass

  • Sr. Member
  • ****
  • Posts: 380
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.





 

Did you know?

Street names for barbiturates include reds, red devils, yellow jackets, blue heavens, Christmas trees, and rainbows. They are commonly referred to as downers.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

Approximately 500,000 babies are born each year in the United States to teenage mothers.

Did you know?

Parkinson's disease is both chronic and progressive. This means that it persists over a long period of time and that its symptoms grow worse over time.

Did you know?

The first war in which wide-scale use of anesthetics occurred was the Civil War, and 80% of all wounds were in the extremities.

For a complete list of videos, visit our video library