The higher the required reserve ratio, _____.
a. the larger the money multiplier
b. the smaller the money multiplier
c. the more the excess reserves after each round of the money-creation process
d. the more the money that can be lent in each round of the money-creation process
e. the lower the demand for cash by the non-banking public
Question 2
In the income-expenditure model, if autonomous investment decreases by 10 billion, _____.
a. the aggregate expenditure line shifts upward by 10 billion
b. planned saving increases by 10 billion
c. the aggregate expenditure line shifts downward by 10 billion
d. planned saving decreases by 10 billion
e. the equilibrium level of real GDP demanded increases by 10 billion
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