If Most Individuals Accept Paper Currency in Transactions, and Paper

question 39

Multiple Choice

If most individuals accept paper currency in transactions, and paper currency is convertible into gold, then banks can safely issue

• A)paper currency equal to the bank's commercial debt divided by their gold reserves.
• B)as much paper currency as they please.
• C)more paper currency than the value of the gold they hold.
• D)no more paper currency than the value of the gold they hold.
• E)paper currency equal to a fraction of the gold they hold.

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