In February, 2010 the U

question 481

Multiple Choice

In February, 2010 the U.S. M1 money multiplier crashed to 0.786. Each $1 increase in the monetary base resulted in the quantity of money increasing by only $0.79. Where did the remaining $0.21 disappear?

• A) Banks held part of the $0.21 as excess reserves.
• B) Banks loaned out the $0.21.
• C) Consumers held part of the $0.21 as currency.
• D) Both A and C are correct.

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Definitions:

Independent Variable

A variable in an experiment or study that is manipulated or categorized to observe its effect on a dependent variable.

Adjusted R Square

A statistical measure that indicates the proportion of variance in the dependent variable predictable from the independent variable(s), adjusted for the number of predictors in the model.

Variance

The square of the standard deviation, indicating how much the values in a set vary from the mean.

Prediction Interval

A range of values that is likely to contain the value of an unknown parameter for a given level of confidence.