Answer to Question #30542 in Macroeconomics for rion
2013-05-15T22:20:18-04:00
RRR is 5%. Loans are deposited in checking accounts. If the Fed sells $1000 of US bonds to a commercial bank. What can we expect to happen?
The money supply will FALL:
A) by $20,000
B) by $1,000
Money supply will INCREASE:
C) by $20,000
D) by $1,000
OR:
E) The money supply will be unchanged
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An economy in which MPC is .95 and RRR is 10%. If imports increase by 15, what is he change in real GDP?
A) -300
B) -150
C) 300
D) Impossible to determine with provided information
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So, I think the answer to #1 is E, and #2 is D.
If I could get any help it would be much appreciated, just trying to understand all of this. Thank you very much for your time!
1
2013-05-21T08:25:38-0400
1.E) The money supply will be unchanged Because Fed doesn't create new money by selling bonds, so the supply will not increase or decrease. 2.D) Impossible to determine with provided information because we need such additional info, as price level (or inflation).
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