If banks choose not to lend out their excess reserves, the money supply will not expand.
a. True
b. False
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QUESTION 2An increase in the interest rate, other things constant, decreases the amount of investment spending.
a. True
b. False
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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
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QUESTION 4The higher the opportunity cost of borrowing, the higher the amount of investment, other things constant.
a. True
b. False
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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
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QUESTION 6Purchases of existing commodities, such as gold and precious gems, are considered investment spending by economists.
a. True
b. False
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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
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QUESTION 8An increase in the interest rate will increase consumption spending.
a. True
b. False
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QUESTION 9From a bank's point of view, its deposits are liabilities.
a. True
b. False
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