The extent of money expansion will be:
a. greater if banks hold on to excess reserves.
b. greater if private individuals hold on to cash.
c. greater if banks hold on to excess reserves but less if private individuals hold on to cash.
d. less if banks hold on to excess reserves but greater if private individuals hold on to cash.
e. less if banks hold on to excess reserves or private individuals hold on to cash.
Question 2
If the spending multiplier is greater than 1.0, a 200 billion increase in autonomous investment will cause:
a. equilibrium investment to increase by less than 200 billion.
b. equilibrium investment to decrease by more than 200 billion.
c. equilibrium real GDP demanded to increase by more than 200 billion.
d. equilibrium real GDP demanded to decrease by less than 200 billion.
e. equilibrium saving to decrease by more than 200 billion.
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