If the Demand for Money Increases and the Monetary Authorities

question 145

Multiple Choice

If the demand for money increases and the monetary authorities want interest rates to remain unchanged, which of the following would be appropriate policy?

• A)recall currency from circulation
• B)raise the desired reserves
• C)buy bonds in the open market
• D)raise the bank rate

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Definitions:

Resting Potential

The electrical charge of a neuron when it is not active, reflecting the difference in ion concentration between the inside and outside of the cell.

Electroencephalogram

A test that measures electrical activity in the brain using small, flat metal discs (electrodes) attached to the scalp.

EEG

Electroencephalography, a technique used to record the electrical activity of the brain, useful in diagnosing epilepsy, sleep disorders, and other neurological conditions.

Alan Hodgkin

A British physiologist who, alongside Andrew Huxley, described the ionic mechanisms that underlie the generation of the action potential in neurons.