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MMLU-Pro / 7634 / Suppose the reserve ratio is 10 percent and the Fed buys …

Problem

Answer published by the source. Consult the official source to check your work against its answer.

question

Suppose the reserve ratio is 10 percent and the Fed buys $1 million in Treasury securities from commercial banks. If money demand is perfectly elastic which of the following is likely to occur?

category

economics

options

  1. Money supply increases by $1 million, lowering the interest rate and increasing AD.
  2. Money supply decreases by $10 million raising the interest rate and decreasing AD.
  3. Money supply increases by $10 million lowering the interest rate and increasing AD.
  4. Money supply remains constant, the interest rate falls and AD increases.
  5. Money supply remains constant the interest rate does not fall and AD does not increase.
  6. Money supply increases by $20 million, lowering the interest rate and increasing AD.
  7. Money supply increases by $10 million, the interest rate falls and AD does not increase.
  8. Money supply increases by $10 million the interest rate does not fall and AD does not increase.
  9. Money supply decreases by $1 million, raising the interest rate and decreasing AD.
  10. Money supply decreases by $20 million, raising the interest rate and decreasing AD.

src

ori_mmlu-high_school_macroeconomics

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Source and history

upstream_id / Original problem ID
7634
task_id
b80b2339-afef-57b4-a90f-84fc0c767871
task_key
default--test--7634
task_revision_id
1
config / split
default / test

Official source

initial import