I. Multiple Choice Section (30 points).
I. Multiple Choice Section (30 points).
I. Multiple Choice Section (30 points).
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II. True/False <strong>Section</strong> (20 <strong>points</strong>)<br />
For each question provide a short explanation (no more than 1-2 sentences) of your<br />
answer. Use equations if necessary<br />
1. (True/False)<br />
An increase in the discount rate would be a signal of a<br />
tightening in the money supply.<br />
2. (True/False)<br />
Growth in the labor force is the only identified source of<br />
growth in potential GDP.<br />
3. (True/False)<br />
If the Federal Reserve buys bonds, and the sellers prefer to<br />
keep the proceeds in currency, then the potential increase in<br />
the total money supply will be smaller than if they keep the<br />
proceeds in banks.<br />
4. (True/False)<br />
If the reserve requirement were 100%, then the money<br />
multiplier would equal 0.<br />
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