In the Simple Deposit Expansion Model,a Decline in Checkable Deposits

question 87

Multiple Choice

In the simple deposit expansion model,a decline in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed

• A)sold $200 in government bonds.
• B)sold $500 in government bonds.
• C)purchased $200 in government bonds.
• D)purchased $500 in government bonds.

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Definitions:

Mortgagor

A borrower in a mortgage agreement who uses property as security for a loan.

Mortgagee

The mortgagee is the lender in a mortgage agreement, typically a financial institution, who lends money to the borrower (mortgagor) for purchasing real estate.

NINJA Loan

A loan that has been negotiated by a borrower with “no income, no job, and no assets.”

Qualifications

The skills, knowledge, and experiences that make an individual suitable for a specific job or activity.