Which of the following changes would clearly increase the supply of money in the banking system?
a. an increase in the percentage of money people want to hold as currency and a decrease in the fraction of deposits banks want to hold as excess reserves
b. an increase in the percentage of money people want to hold as currency and an increase in the fraction of deposits banks want to hold as excess reserves
c. a decrease in the percentage of money people want to hold as currency and a decrease in the fraction of deposits banks want to hold as excess reserves
d. a decrease in the percentage of money people want to hold as currency and an increase in the fraction of deposits banks want to hold as excess reserves
Question 2
If the traditional Keynesian views turn out to be accurate, an increase in government spending would:
a. increase the price level.
b. decrease the level of investment.
c. increase the equilibrium level of real GDP.
d. decrease the level of consumption.
e. decrease the money supply.
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Elimination, System of Linear Equations