Suppose a Person Cashes His Payroll Check and Holds All

question 147

Multiple Choice

Suppose a person cashes his payroll check and holds all the funds in the form of currency. Everything else held constant,total reserves in the banking system ________ and the monetary base ________.

• A)remain unchanged;increases
• B)decrease;increases
• C)decrease;remains unchanged
• D)decrease;decreases

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Definitions:

Education

The process of facilitating learning, acquiring knowledge, skills, values, beliefs, and habits through various means such as teaching, training, storytelling, and research.

Corrective Tax

A tax designed to incentivize economic activities that are more socially desirable or to correct market imperfections.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity of that good that consumers are willing to purchase, usually sloping downward.

Pollution

The introduction of contaminants into the natural environment that cause adverse change.