Author Question: When there is a shortage in the market, the quantity sold is A) greater than the quantity ... (Read 78 times)

clippers! · **on:** Jun 29, 2018

When there is a shortage in the market, the quantity sold is

A) greater than the quantity supplied.
B) equal to the quantity supplied.
C) less than the quantity supplied.
D) less than the quantity bought.

Question 2

If the currency drain ratio increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

What will be an ideal response?

mcarey591 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

B

Answer to Question 2

If the currency drain ratio increases, the size of the money multiplier decreases, which decreases the quantity of money. To maintain the quantity of money at its initial amount by changing the monetary base, the Fed must increase the monetary base.