The sale of government securities by the Fed will cause
a. a decrease in both the monetary base and the money supply.
b. an increase in both the monetary base and the money supply.
c. an increase in the monetary base but no change in the money supply.
d. a decrease in the monetary base but no change in the money supply.
A
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The money supply is $12.5 million, currency held by the nonbank public is $2.5 million, and the reserve—deposit ratio is 0.25
(a) What is the quantity of bank deposits? (b) What is the quantity of bank reserves? (c) What is the quantity of the monetary base? (d) What is the money multiplier (give a number)?
________ rational expectations, ________
A) Most people have always formed; but macroeconomists have only recently come to recognize this fact B) Macroeconomists have invented; and are trying to teach them to the general public C) Policy makers have devised; in search of more effective policies D) The latest information is an important input in; so most people must make do with adaptive expectations