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Author Question: If the currency drain ratio increases, the monetary base decreases. Explain whether the previous ... (Read 30 times)

Deast7027

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on: Jun 29, 2018
If the currency drain ratio increases, the monetary base decreases. Explain whether the previous statement is correct or incorrect.
 
  What will be an ideal response?

Question 2

As the economy enters an expansion so that people's expected future incomes rise, there will be
 
  A) a decrease in the nominal interest rate.
  B) a leftward shift in the supply of loanable funds curve.
  C) an increase in the supply of loanable funds.
  D) a leftward shift in the demand for loanable funds curve.
  E) None of the above answers is correct.


pocatato

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The statement is false. If the currency drain ratio increases, the money multiplier (and the quantity of money) decreases but the monetary base itself is unaffected.

Answer to Question 2

C


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