Other Things Being Constant,if the Public Decides to Hold More

question 3

Multiple Choice

Other things being constant,if the public decides to hold more money in the form of currency rather than chequing deposits,what will be the effect on bank reserves and M2?

• A)Bank reserves will increase, and M2 will ultimately decline as well.
• B)Bank reserves will decline, and M2 will ultimately increase as well.
• C)Bank reserves will decline, and M2 will ultimately decline as well.
• D)Bank reserves will increase, and M2 will ultimately increase as well.

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Definitions:

Multiple Regression

A method in statistics that predicts how a dependent variable changes based on two or more independent variables.

Blood Pressure

The pressure of circulating blood on the walls of blood vessels, often measured for health assessment.

Significance Level

A significance level is a threshold in hypothesis testing that determines the probability of rejecting the null hypothesis when it is actually true, often denoted by alpha.

Linearly Related

Describes two variables that change together at a constant rate, represented graphically as a straight line.