What role does the modern banking system play in the creation of money?

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$1$ point

Facilitating international trade

Providing loans to households

Generating profits for shareholders

Multiplying the initial deposit through lending

How do changes in reserve requirements affect the money multiplier?

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$1$ point

They have no effect on the money multiplier

Higher reserve requirements decrease the money multiplier

Lower reserve requirements decrease the money multiplier

Higher reserve requirements increase the money multiplier

What determines the supply of money in the money market?

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$1$ point

Consumer preferences

Federal Reserve policy

Stock market performance

All of the above

Money demand in the money market is influenced by

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$1$ point

Nominal income

Size of transaction

Price level

All of the above

How does a shift in the Fed's rule impact the economy's interest rate?

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$1$ point

It has no effect on the interest rate

It increases the interest rate

It decreases the interest rate

It may increase or decrease the interest rate depending on the direction of the shift