same, if reserve requirements are increased, the reserve ratio a, decreases, the
ID: 2441526 • Letter: S
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same, if reserve requirements are increased, the reserve ratio a, decreases, the money multiplier increases, and the money supply increases. O b. decreases, the money multiplier decreases, and the money supply increases O c. increases, the money multiplier increases, and the money supply increases. o d increases, the money multiplier decreases, and the money supply decreases. QUESTION 11 When the money market is drawn with the value of money on the vertical axis, an increase in the price level O a shift to the left of the money demand curve. causes a O c shift to the right of the money demand curve. O d movement to the left along the money demand curve. QUESTION 12 If the number of dollars needed to buy a representative basket of goods falls, the price level o a. falls, so the value of money falls O b, rises, so the value of money rises O c. falls, so the value of money rises. O d rises, so the value of money falls QUESTION 13 You find that to attract a sufficient number of workers you have to pay them more dollars. Given the price of your output you o a Neither the real nor the nominal value of the wages you pay O b. The real and nominal value of the wages you pay you are paying yExplanation / Answer
10) When reserve requirements are increased, required reserve ratio is increased, money multiplier is reduced and this implies that money supply is reduced. This is because banks have fewer excess reserves so banks can make fewer loans. Select D
11) When price level rises, value of money falls and people start demanding more money. This happens when there is a downward movement of money demand. Option B.
12) When fewer dollars can purchase the a good than the value of money rises and price level falls. Option C.
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