Which of the Following Is Not True of the Demand

question 26

Multiple Choice

Which of the following is not true of the demand deposit multiplier?

• A) Its formula is 1/RRR.
• B) It represents the change in demand deposits generated by a change in reserves.
• C) It represents the change in demand deposits generated by a change in taxes.
• D) It is a way to determine the effect on money supply from a given Federal Reserve action.
• E) It ignores changes in the behavior of the public and the banks.

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Definitions:

Federal Trade Commission

The Federal Trade Commission is a U.S. federal agency established to protect consumers and promote competition by preventing anticompetitive, deceptive, and unfair business practices.

Unfair Practices

Business actions that are dishonest, deceptive, or not in accordance with established legal and ethical standards.

Public Hearings

Formal meetings held by governmental bodies to allow the public to express opinions and provide input on proposed regulations, projects, or decisions.

AT&T Case

Refers to a landmark antitrust case against the American Telephone & Telegraph Company, leading to the breakup of its monopoly in the telecommunications industry.