In Macroland there is $1,000,000 in currency that can either be held by the public or used by banks as reserves. Banks'
Posted: Sun Apr 10, 2022 8:36 am
In Macroland there is $1,000,000 in currency that can either be
held by the public or used by banks as reserves. Banks' desired
reserve/deposit ratio is 10%. If the public of Macroland decides to
hold less currency, decreasing the proportion they hold from 50% to
25%, the money supply in Macroland will ______.
a) increase.
b) remain the same.
c) may either increase or decrease.
held by the public or used by banks as reserves. Banks' desired
reserve/deposit ratio is 10%. If the public of Macroland decides to
hold less currency, decreasing the proportion they hold from 50% to
25%, the money supply in Macroland will ______.
a) increase.
b) remain the same.
c) may either increase or decrease.