Cashing out capital gains in Virtual Currency System #3 (i.e., turning virtual capital gains into real world currencies) causes the nation's:
a. Monetary base to fall.
b. M2 money supply to rise.
c. M2 money multiplier to remain the same.
d. M2 money supply to fall.
.C
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If the purchasing power of the dollar is greater than the purchasing power of the euro, purchasing power parity predicts that the exchange rate will
A) not fluctuate and stay constant in the long run. B) increase if the exchange rate is greater than 1 euro per dollar. C) decrease if the exchange rate is less than 1 euro per dollar. D) be equal to the relative purchasing power across the currencies in the long run.
International trade based solely on internal scale economies in both countries is likely to be carried out by
A) monopolists in each country. B) a relatively large number of price competing firms. C) a relatively small number of price competing firms. D) a relatively small number of imperfect competitors. E) a large number of oligopolists in each country.