1. If CPI decreases from 200 to 160 in the U.S. , then the expenditure schedule...
1. If CPI decreases from 200 to 160 in the U.S. , then the
expenditure schedule will shift downward.
expenditure schedule will shift upward.
slope of the expenditure schedule increases.
slope of the expenditure schedule decreases.
2. When a bank makes loans with excess reserves, it
creates money.
destroys money.
alters the composition of M1.
leaves the money supply unchanged.
Homework Answers
(1) (A)
A decrease in CPI means a fall in inflation rate, which is measured by percentage change in CPI. When inflation rate falls, real income increases, which increases consumption, increasing aggregate expenditure and shifting expenditure schedule upward.
(2) (A)
Making of loans increase money supply, enabling banks to create money.
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1. If CPI decreases from 200 to 160 in the U.S. , then the
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