1. If the required reserve ratio is 20% and $10,000 of new money is printed, and
ID: 1206113 • Letter: 1
Question
1. If the required reserve ratio is 20% and $10,000 of new money is printed, and deposited into the system, by the federal reserve. What is the minimum change to the money supply is?
2. If the economy is experiencing a recession that would be considered, a negative, GDP gap.
3. In the US economy the money supply is controlled by the:
4. Consumption accounts for _______________ percent of total expenditures in the US economy.
5. The group that sets the Federal Reserve System policy on buying and selling government securities is the:
a) $8,000 b) $40,000 c) $10,000 d) $18,000 e) $50,000Explanation / Answer
ans 1
$ 50000
total money supply created =change in monetary base/ rr
=10000/0.20 = $50000
ans 2
a) true
recession is considered as negative GDP gap .This occurs when actual output is less than potential output gap. This is also called a deflationary (or recessionary) gap
ans 3
Federal Reserve System
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