If banks choose not to lend out their excess reserves, the money supply will not expand.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2An increase in the interest rate, other things constant, decreases the amount of investment spending.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3When the Fed buys U.S. government securities from a bank, that bank's excess reserves and required reserves increase but total reserves decrease.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4The higher the opportunity cost of borrowing, the higher the amount of investment, other things constant.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5When the Fed buys U.S. government securities from a member bank, that bank's excess reserves, required reserves, and total reserves all increase.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6Purchases of existing commodities, such as gold and precious gems, are considered investment spending by economists.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7If a bank borrows 1,000 from the Fed and lends it out, the bank sets in motion a process that will result in an expansion of the money supply by a multiple of that 1,000.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 8An increase in the interest rate will increase consumption spending.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 9From a bank's point of view, its deposits are liabilities.
a. True
b. False
Indicate whether the statement is true or false
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