Everything Else Held Constant,an Increase in the Time Deposit Ratio

question 172

Multiple Choice

Everything else held constant,an increase in the time deposit ratio will result in ________ in the M1 money multiplier and ________ in the M2 money multiplier.

• A)an increase;an increase
• B)no change;an increase
• C)a decrease;a decrease
• D)no change;a decrease

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Definitions:

Tax Expenditures

Government losses in tax revenue due to exemptions, deductions, credits, and preferential tax rates.

Subsidize

To support an organization, activity, or economic sector by providing financial assistance, often from the government to keep prices low or to ensure it continues to operate.

Fiscal Policy

Government strategies related to taxation and public spending, used to influence the economy and fund public services.

Taxing and Spending

The government's practice of collecting revenues through taxes and deciding on the allocation of these funds for various public expenditures.