Homework 5 part 3

# Homework 5 part 3 - 30 If the money multiplier falls by 50...

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30. If the money multiplier falls by 50%, then the Fed, to keep the money supply constant, would have to double the monetary base. A) True B) False Table for Individual Question Feedback Points Earned: 1.0/1.0 Correct Answer(s): True 31. Prior to October 2008, the M1 money multiplier was trending downward since the required reserve ratio administered by the Fed was trending upward. A) True B) False Table for Individual Question Feedback Points Earned: 1.0/1.0 Correct Answer(s): False 32. According to the quantity theory of money in percent change form, then if velocity falls so that its growth rate is negative then the Fed, to keep inflation and output growth stable, should match the decrease in velocity with an equivalent increase in the percent growth of the money stock. Table for Individual Question Feedback Points Earned: 1.0/1.0 Correct Answer(s): True

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