The Money Multiplier Will Decrease If the Currency Drain Ratio

question 73

Multiple Choice

The money multiplier will decrease if the currency drain ratio

• A)increases or the desired reserve ratio increases.
• B)decreases or the desired reserve ratio decreases.
• C)decreases or the desired reserve ratio increases.
• D)increases or the desired reserve ratio decreases.
• E)decreases and the monetary base increases.

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Definitions:

Inferior Good

A type of good whose demand decreases as the consumer's income increases, opposite to normal goods.

Complementary Good

A product or service that enhances the use or value of another product or service when used together.

Substitute

A good whose demand increases when the price of another good increases. For example, two brands of cola soft drinks are substitutes.

Complement

A good or service that is used together with another good or service, increasing its demand.