Everything Else Held Constant,a Decrease in the Excess Reserves Ratio

question 183

Multiple Choice

Everything else held constant,a decrease in the excess reserves ratio causes the M1 money multiplier to ________ and the money supply to ________.

• A)decrease;increase
• B)increase;increase
• C)decrease;decrease
• D)increase;decrease

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Definitions:

Absolute Value

A mathematical function that measures the distance of a number from zero on the number line, denoted as |x|, regardless of direction.

Evaluate

To calculate the value of an expression by substituting the values of the variables and performing the operations.

Algebraic Expression

A combination of numbers, variables, and arithmetic operations that represents a mathematical phrase.

Simplify

The process of making an expression easier to understand by reducing it to its most basic form.