In the Simple Deposit Expansion Model,an Expansion in Checkable Deposits

question 139

Multiple Choice

In the simple deposit expansion model,an expansion 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:

Substitute Goods

Products or services that can replace or be used in place of one another, having the ability to satisfy similar consumer needs or desires.

Iced Tea

A chilled beverage made by cooling brewed tea and typically served with ice, sometimes sweetened or flavored.

Complementary Goods

Products or services that are typically consumed together, such that demand for one increases demand for the other.

Coffee

A brewed drink prepared from roasted coffee beans, which are the seeds of berries from the Coffea plant, and is one of the most popular beverages globally.