ECO_201011S_20-_20Workshop_202

Interest rates rise because people sell bonds d

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: demand for money is interest elastic 9. The tendency for investment growth to be more volatile than GDP growth is known as the A. multiplier effect B. accelerator effect C. cyclical effect D. investment effect 10. When the money supply increases, A. interest rates fall because people sell bonds B. interest rates fall because people buy bonds C. interest rates rise because people sell bonds D. interest rates rise because people buy bonds 11. Decreasing the reserve ratio allows the banking system to create more money due to the fact that A. commercial banks experience an increase in excess reserves B. the monetary multiplier increases C. both A and B D. none of the above – decreasing the reserve ratio results in money destruction Suppose that there is no government in the country of Atlantis, a country which is currently cut ­off (closed) from the rest of the world. Its citizens...
View Full Document

Ask a homework question - tutors are online