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Unformatted text preview: a. The money supply immediately increases by $1,000 b. The money supply initially falls by $1,000 c. The money supply is initially unchanged, but eventually grows by $1,000 d. The money supply is initially unchanged, but eventually grows by more than $1,000 6. Where m is the reserve ratio, the simplified multiplier formula is: a. Change in deposits = (1/m) x change in reserves b. Change in money = (1/m) x change in reserves c. Change in loans = (1/m) x change in reserves d. Change in excess reserves = (1/m) x change in reserves 7. If they were left unregulated, banks would probably: a. Operate without a reserve ration b. Refuse to create money c. Change the money supply in ways that made the business cycle worse d. Operate so conservatively that ordinary people would lack access to loans...
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This note was uploaded on 09/09/2008 for the course ECON 202 taught by Professor Fernandez during the Fall '08 term at University of Louisville.
- Fall '08