14 15 16 17. 18 19 20. . If the required reserve ratio is 20 percent, what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the banking system as a result? a) b) C) 60 $603,003; $600,000 $600,000; $3,000,000 $400,000; $400,000 $400,000; $2,000,000 . The equation of exchange states that: a) b) C) d) government spending = taxes plus the federal budget deficit. the reciprocal of the reserve requirement = the deposit expansion multiplier. the money supply times the velocity of money = the price level times the quantity of goods and services produced. the price level times the velocity of money = the money supply times the quantity of goods and services produced. . According to the simple quantity theory of money, a change in the money supply of 6.5% would, holding velocity constant, lead to: a) b) C) d) a) 13') C) d) a 6.5% change in real GDP. a 6.5% change innominal GDP. a 6.5% change in velocity. a 6.5% change in aggregate supply. A contraction of the money supply: increases the interest rate and decreases aggregate demand. increases both the interest rate and aggregate demand. lowers the interest rate and increases aggregate demand. lowers both the interest rate and aggregate demand. . Which of the following would constitute contractionary monetary policy by the Central Bank (Fed)? a) b) C) d) An increase in income tax rates, a cut in government spending, and an elimination of the investment tax credit Open market sales of government securities, an increase in the discount rate, and an increase in reserve requirements An increase in tariffs on imported goods and a decrease in foreign aid Open market purchases of government securities, a cut in the discount rate, and a decrease in reserve requirements . The Central Banks (Fed) purchases and sales of government securities are called: a) b) C) d) margin operations. open market operations. small-dealer transactions. intermediary transactions. In which of the following situations is it certain that the quantity of money demanded by the public will decrease? a) nominal GDP decreases and the interest rate decreases. b) nominal GDP increases and the interest rate decreases. c) nominal GDP decreases and the interest rate increases. d) nominal GDP increases and the interest rate increases. A \"I'- 1" \"-T'n'\" \"if!\" A A