If the required reserve ratio is 0.2, and the Fed buys 3,000 of U.S. government securities, the maximum amount by which the money supply can increase is:
a. 200.
b. 2,000.
c. 600.
d. 15,000.
e. 1,500.
Question 2
When current production of goods and services in an economy is greater than planned aggregate expenditure, _____.
a. inventories of goods and services will increase
b. firms will increase production to replenish depleted inventories
c. businesses and households will increase planned aggregate spending
d. the price level will automatically rise to restore equilibrium in the economy
e. leakages must equal planned injections
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