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.

---

Definitions:

Lawsuit

A legal action brought in a court by a plaintiff against a defendant, typically seeking compensation for some form of harm or enforcement of a right.

Common Property Resource

Resource to which anyone has free access.

Efficient Use

Utilization of resources in such a way that maximizes the production of goods and services at lowest cost.

Coase Theorem

A principle stating that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.