If uncertainty causes commercial banks to increase their holdings of excess reserves, other things constant, this will
a. reduce the money supply during a period of inflation and increase it during a recession.
b. reduce the size of the deposit expansion multiplier.
c. increase the size of deposit expansion multiplier.
d. reduce the size of the deposit expansion multiplier during a period of inflation and increase it during a recession.
B
You might also like to view...
The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point
A) A. B) B. C) C. D) D.
Which of the following would best explain a decline in potential GDP?
A) Negative net investment B) The discovery of vast new oil reserves C) a lower price level D) a decrease in the infant mortality rate E) decrease in wages and profits