In December 1999 People Feared That There Might Be Computer

question 87

Multiple Choice

In December 1999 people feared that there might be computer problems at banks as the century changed.Consequently,people wanted to hold relatively more in currency and relatively less in deposits.In anticipation banks raised their reserve ratios to have enough cash on hand to meet depositors' demands.These actions by the public

• A)would increase the multiplier.If the Fed wanted to offset the effect of this on the size of the money supply,it could have sold bonds.
• B)would increase the multiplier.If the Fed wanted to offset the effect of this on the size of the money supply,it could have bought bonds.
• C)would reduce the multiplier.If the Fed wanted to offset the effect of this on the size of the money supply,it could have sold bonds.
• D)would reduce the multiplier.If the Fed wanted to offset the effect of this on the size of the money supply,it could have bought bonds.

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Definitions:

Productivity

A measure of the efficiency of production, often expressed as the ratio of output to input in the production process.

Marginal Revenue Product

The extra income produced by utilizing an additional unit of a resource or production factor.

MRP Curve

The Marginal Revenue Product curve, representing the additional revenue generated by hiring one more unit of a resource in the factor market.

Wage Rate

The standardized payment given to employees for their labor, typically denoted as an amount per hour or per year.