Who decides what portion of the money supply will be held as ...

[bucstennis@aim.com]

Who decides what portion of the money supply will be held as currency in circulation?
 a. The Treasury
  b. The central bank
  c. The banking system
  d. The non-bank public
  e. All the above.

Question 2

Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
 a. The GDP Price Index rises, and nominal value of the domestic currency falls.
  b. The GDP Price Index falls, and nominal value of the domestic currency rises.
  c. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
  d. The GDP Price Index rises, and nominal value of the domestic currency rises.
  e. There is not enough information to determine what happens to these two macroeconomic variables.

[nguyenhoanhat]

Answer to Question 1

.D

Answer to Question 2

.A

[bucstennis@aim.com]

Thank you

[nguyenhoanhat]

No problemo