If the Ratio of Reserves to Deposits (Rr) Increases, While

question 44

Multiple Choice

If the ratio of reserves to deposits (rr) increases, while the ratio of currency to deposits (cr) is constant and the monetary base (B) is constant, then:

• A) it cannot be determined whether the money supply increases or decreases.
• B) the money supply increases.
• C) the money supply decreases.
• D) the money supply does not change.

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Definitions:

Negotiable Document

A written instrument, such as a bill of exchange, promissory note, or check, that guarantees payment of a specific amount of money and is transferable among different parties.

Goods-in-bailment

Items that are temporarily delivered to someone (the bailee) for custody or storage, without transfer of ownership.

Deliver to Order

A stipulation in shipping where goods are delivered to a specific party as per the instructions of the shipping document or bill of lading.

Innocent Purchaser

A legal term for someone who buys property without knowledge of any existing claims, disputes, or flaws affecting the property's title.