A Decrease in the Parameter, C, the Proportion of Money

question 29

Multiple Choice

A decrease in the parameter, c, the proportion of money individuals wish to hold as currency, will tend to cause which of the following?

• A) An increase in the money multiplier.
• B) A decrease in the money multiplier.
• C) An increase in the monetary base.
• D) An increase in central bank money.
• E) A decrease in monetary base.

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Definitions:

Control Over Price

The ability of a person or entity to influence the market price of a product or service.

Individual Producer

A single entity or person that creates goods or provides services in an economy.

Market Power

Refers to the ability of a firm or group of firms to manipulate the price and output levels in the market to their advantage.

Supply

The total amount of a specific good or service available to consumers at a given price level.