During wars the public tends to hold relatively more currency and relatively fewer deposits. This decision makes reserves
a. and the money supply increase.
b. and the money supply decrease.
c. increase, but leaves the money supply unchanged.
d. decrease, but leaves the money supply unchanged.
b
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Refer to the above figure. Use the DD-AA model to examine and compare the response of an economy under fixed and floating exchange rate to a permanent fall in foreign demand for its exports
What will be an ideal response?
Interest rates increased continuously during the 1970s. The most likely explanation is
A) banking failures that reduced the money supply. B) a rise in the level of income. C) the repeated bouts of recession and expansion. D) increasing expected rates of inflation.
Printing of paper money by the Confederate government led to
a. an immediate hyperinflation that lasted for the entire period of the War. b. a short-term hyperinflation that lasted for only the first year of the War.c hyperinflation in the final months of the War.d sporadic episodes of hyperinflation that emerged throughout the War.
If consumers are less willing and able to pay for each level of output than they were previously, then apparently: a. demand has increased
b. supply has increased. c. demand has decreased. d. there has been a movement down along the demand curve.