Author Question: In a simplified banking system in which all banks are subject to a 10 percent required reserve ... (Read 55 times)

berenicecastro · **on:** Jun 30, 2018

In a simplified banking system in which all banks are subject to a 10 percent required reserve ratio, a 1,000 open market sale by the Fed to a bank would cause the money supply to:
a. increase by 1,000.
b. increase by 100,000.
c. decrease by 10,000.
d. decrease by 1,000.
e. remain unchanged.

Question 2

Describe the vicious cycle of poverty. What are the consequences of this cycle?

Jane · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

c

Answer to Question 2

The vicious cycle of poverty explains that the people in LDCs are poor because of a low level of investment in capital goods production, and the low level of investment is because the people are poor. The consequences are high infant mortality rates, low life expectancy, a low percentage of people using safe water, and a low percentage of school aged children in school.