In a system of 100-percent-reserve banking, changes in the money supply depend o
ID: 1125358 • Letter: I
Question
In a system of 100-percent-reserve banking, changes in the money supply depend on the decisions of the Fed as well as the behavior of depositors and bankers.
True
False
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"Leaning against the wind" is exemplified by a(n)
increase in the money supply when there is a recession.
All of the above are correct.
tax increase when there is a recession.
decrease in government expenditures when there is a recession.
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According to the IGM poll, most economists think that the benefits of ARRA exceeded the costs.
True
False
a.increase in the money supply when there is a recession.
b.All of the above are correct.
c.tax increase when there is a recession.
d.decrease in government expenditures when there is a recession.
Explanation / Answer
1. True.
It depends on how much consumers deposit their money in the bank and secondly on Fed, how much it changes policy to affect money supply.
2. a) increase in the money supply when there is a recession.
There is recession in the economy and it results from decrease in money supply. When Fed increases the money supply then it acts as Leaning against the wind.
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