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irina [24]
3 years ago
12

The Fed increased the supply of US dollars at an average rate of 6 percent per year over the 1980-2005 period. Based on the theo

ry of production capacity, if the Fed had instead increased the money supply at the rate of 7 percent per year during that period, given other policies: (Select all that apply.)
Business
1 answer:
Charra [1.4K]3 years ago
4 0

Answer:

These are the options for the question:

A. The average inflation rate during 1980-2005 would have been one percentage point higher than it actually was in that period.

B. The economy would have enjoyed a much higher level of output in the mid-2000s.

C. The price level in 2005 would have been about 28 percent higher than what it actually reached in that year.

D. The output of the economy in the mid-2000s would not have been very different from the levels it actually reached.

And this is the correct answer:

A. The average inflation rate during 1980-2005 would have been one percentage point higher than it actually was in that period.

Explanation:

According to the production capacity theory, if the money supply is increased, but the quantity of output is not, or is not increased at the same rate, then, inflation will set in.

In this case, the question is telling us that the Fed would have increased the money supply by one percentage point, but output (GDP growth) would have stayed the same.

For this reason, all else being equal, this higher amount of money supply would have simply created more inflation.

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Answer:

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3 years ago
If a commercial banking system has $200,000 in checkable deposits, actual reserves of $70,000, and a reserve ratio of 20 percent
Solnce55 [7]

Answer:

B. False

Explanation:

The banking system can expand the supply of money by a maximum of $1,000,000 ($200,000/0.2).

The maximum currency creation by the banking system is a function of the checkable deposits and the reserve ratio.  The formula for this is called the money multiplier, and is given as the checkable deposits divided by the reserve ratio.  With this multiplier factor, banks can increase the currency in circulation.  This is why central banks use the reserve ratio to monitor the supply of money in their economies.

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3 years ago
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Ira Lisetskai [31]

Answer:

b. anchoring and adjustment heuristic.

Explanation:

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Janice also used a strategy of anchoring and adjustment bias by giving first offer of salary. This will be considered as anchor which is placed and all the other negotiations will be around that salary anchor which will be used as starting point.

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Answer: Option D

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2. Price

3. Place

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