An increase in the reserve ratio: a. Increases the size of thespending income mu

Question

An increase in the reserve ratio:



a. Increases the size of thespending income multiplier.

b. Decreases the size of thespending income multiplier.

c. Decreases the size of themoney mulitplier.

d. Increases the size of themoney multiplier.
Open market operations refer to:



a. Purchases of stock in the NewYork Stock Exchange.

b. The purchase or sale ofgovernment securities by the Fed.

c. Central bank lending tocommercial banks.

d. The specifying of loanmaximums on stock purchases.
Open market operations refer to:



a. Purchases of stock in the NewYork Stock Exchange.

b. The purchase or sale ofgovernment securities by the Fed.

c. Central bank lending tocommercial banks.

d. The specifying of loanmaximums on stock purchases.

Explanation / Answer

c. Decreases the size of the moneymulitplier :
Open market operations are the means ofimplementing monetary policyby which a central bankcontrols its national money supply bybuying and selling government securities :
answer is b). The purchase or sale of governmentsecurities by the Fed :
Open market operations are the means ofimplementing monetary policyby which a central bankcontrols its national money supply bybuying and selling government securities :
answer is b). The purchase or sale of governmentsecurities by the Fed

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