1) Both theory and experience suggest that (fill in the blank) leads to lower volatility in both money supply growth and inflation.
a. having no central bank
b. having a central bank with a low degree of independence
c. having a central bank with a high degree of independence
d. having a central bank whose governors are elected by popular vote
2) You purchase computer software from a company in Chicago, Illinois those banks with Wells Fargo. You write a check on your Bank of America account in Tallahassee, Florida for $175.00 to pay for the transaction. Which statement below is accurate with regard to the impact on both banks' balance sheets?
a. Wells Fargo gains $175 in deposits and cash; Bank of America loses $175 in deposits and cash.
b. Wells Fargo gains $175 in deposits and reserves; Bank of America loses $175 in deposits and reserves.
c. Wells Fargo loses $175 in deposits and reserves; Bank of America gains $175 in deposits and reserves.
d. Wells Fargo gains $175 in deposits and loses $175 in reserves; Bank of America loses $175 in deposits and gains $175 in reserves.
e. Since the transaction is for $175 for each bank, there is no change in deposits or reserves.