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Suppose that the Fed undertakes an open market purchase of $5 million worth of securities from a bank. If the required reserve ratio is 12%,
Suppose that the Fed undertakes an open market purchase of $5 million worth of securities from a bank. If the required reserve ratio is 12%, what is the resulting change in checkable deposits (or the money supply), assuming that there are no cash leakages and that banks hold zero excess reserves? $4.17 million $7.95 million $5.68 million $41.67 million Exhibit 11-4 Taxable Income Taxes $0 - $23,000 $23,001 - $42,000 $42,001 - $100,000 Greater than $100,000 15% of taxable income $3,450 + 20% of everything over $23,000 $7,250 + 25% of everything over $42,000 $21,750 + 30% of everything over $100,000 Refer to Exhibit 11-4. If a person's taxable income is $90,000, how much does he pay in taxes? $17,600. $19,250. $8,780. $22,500. The interest rate effect is one of the reasons why an AD curve is downward-sloping. shifters of an AD curve. reasons why a short-run aggregate supply curve can be derived. shifters of a short-run aggregate supply curve. Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point directly to the left of it. Assuming that the PPF has not shifted, this could be due to a gain of resources. a loss of resources. technological improvement in the production of both goods. a new law that interferes with productive efficiency. A decrease in the price level shifts the SRAS curve to the right. shifts the SRAS curve to the left. causes an upward movement along the existing SRAS curve. causes a downward movement along the existing SRAS curve. none of the above
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