AP Macroeconomics - 4.6 Fiscal Policy

Assume that a country's banking system has limited reserves. If the reserve requirement is 15 percent and the central bank sells $20,000 in government bonds on the open market, the money supply will:

• Decrease by a maximum of $133,333

• Decrease by a maximum of $100,000

• Decrease by a maximum of $110,000

• Increase by a maximum of $133,333

Assume that a country's banking system has limited reserves. If the reserve requirement is 12 percent and the central bank buys $50,000 in government bonds on the open market, the money supply will:

• Increase by a maximum of $416,667

• Increase by a maximum of $450,000

• Increase by a maximum of $500,000

• Increase by a maximum of $625,000

Assume that a country's banking system has limited reserves. If the reserve requirement is 8 percent and the central bank sells $5,000 in government bonds on the open market, the money supply will:

• Decrease by a maximum of $50,000

• Decrease by a maximum of $45,000

• Decrease by a maximum of $65,000

• Decrease by a maximum of $62,500

Assume that a country's banking system has limited reserves. If the reserve requirement is 20 percent and the central bank buys $10,000 in government bonds on the open market, the money supply will:

• Increase by a maximum of $40,000

• Increase by a maximum of $50,000

• Increase by a maximum of $80,000

• Increase by a maximum of $100,000

Assume that a country's banking system has limited reserves. If the reserve requirement is 5 percent and the central bank buys $100,000 in government bonds on the open market, the money supply will:

• Increase by a maximum of $2,000,000

• Increase by a maximum of $1,900,000

• Increase by a maximum of $1,500,000

• Increase by a maximum of $2,500,000

Assume that a country's banking system has limited reserves. If the reserve requirement is 25 percent and the central bank sells $40,000 in government bonds on the open market, the money supply will:

• Decrease by a maximum of $120,000

• Decrease by a maximum of $100,000

• Decrease by a maximum of $130,000

• Decrease by a maximum of $160,000

Assume that a country's banking system has limited reserves. If the reserve requirement is 10 percent and the central bank buys $30,000 in government bonds on the open market, the money supply will:

• Increase by a maximum of $300,000

• Increase by a maximum of $350,000

• Increase by a maximum of $250,000

• Increase by a maximum of $275,000

Assume that a country's banking system has limited reserves. If the reserve requirement is 18 percent and the central bank sells $15,000 in government bonds on the open market, the money supply will:

• Decrease by a maximum of $83,333

• Decrease by a maximum of $75,000

• Decrease by a maximum of $70,000

• Decrease by a maximum of $65,000

Assume that a country's banking system has limited reserves. If the reserve requirement is 9 percent and the central bank buys $25,000 in government bonds on the open market, the money supply will:

• Increase by a maximum of $277,778

• Increase by a maximum of $250,000

• Increase by a maximum of $222,222

• Increase by a maximum of $300,000

Assume that a country's banking system has limited reserves. If the reserve requirement is 7 percent and the central bank sells $7,000 in government bonds on the open market, the money supply will:

• Decrease by a maximum of $93,333

• Decrease by a maximum of $100,000

• Decrease by a maximum of $75,000

• Decrease by a maximum of $95,000