Assume a simplified banking system subject to a 20 percent required reserve ratio. If there is an initial increase in excess reserves of 100,000 . the money supply:
a. increases 100,000 b. increases 500,000.
c. increases 600,000 d. decreases 500,000.
QUESTION 2Which of the following makes long-term low-interest loans to LDCs?
a. Agency for International Development (AID).
b. World Bank.
c. International Monetary Fund (IMF).
d. New International Economic Order (NIEO).
QUESTION 3A decrease in the aggregate demand curve along the LRAS curve, all other things unchanged, will generate ______ in potential real GDP and _______ in the price level.
a. an increase; no change
b. a decrease; no change
c. no change; an increase
d. no change; a decrease
QUESTION 4Assume a simplified banking system subject to a 10 percent required reserve ratio. If there is an initial increase in excess reserves of 90,000 and all possible loans are made, the money supply:
a. increases 90,000.
b. increases 900,000.
c. increases 990,000.
d. decreases 90,000.
QUESTION 5How much of the U.S. federal budget is spent on foreign aid?
a. About 1 percent. b. About 5 percent.
c. About 25 percent. d. About 50 percent.
QUESTION 6Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:
a. both the price level and real GDP.
b. real GDP without raising the price level.
c. the price level without affecting real GDP.
d. the price level but reduce real GDP.
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