Question

Which of the following will cause a decrease in SRAS?

	An increase in labor productivity
	An decrease in employee wages
	An increase in government regulations on businesses
	An increase in consumer spending
	A decrease in investment spending

If the required reserve ratio is 5 percent, then the money multiplier is

	0.2
	0.5
	2
	5
	20

Assume an economy where the required reserve ratio is 20 percent. If you withdraw $5,000 from your checking account to go on vacation in Europe, where you spend it all, what happens to the money in circulation in the Macro Islands?

	It decreases by $4,000
	It increases by $4,000
	It decreases by $1,000
	It decreases by $25,000
	It decreases by $5,000

If nominal interest rate equals 12 percent and inflation is 4 percent, then nominal and real interest rates are respectively

	12 percent and 8 percent.
	12 percent and 16 percent.
	16 percent and 8 percent.
	16 percent and 12 percent.
	8 percent and 4 percent.

Danielle recently moved to the United States with $10,000 of acceptable currency that had never been in the system before. Assume Danielle deposits the money into First National Bank. If the central bank has set a required reserve ratio of 20 percent, what is the maximum amount of money First National Bank can create?

	$50,000
	$40,000
	$5,000
	$4,000
	$800

Answer 1