The Smaller the Currency Drain, the

question 423

Multiple Choice

The smaller the currency drain, the

• A) smaller the increase in the quantity of money from an increase in reserves.
• B) more likely it is that the banking system will hold a larger proportion of excess reserves.
• C) the smaller the effect of a change in the discount rate.
• D) larger the increase in the quantity of money from an increase in reserves.

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Definitions:

Numerical Dividing Line

A threshold or boundary defined by a specific numerical value or range.

Many

A term indicating a large number of items, people, or entities in a given context.

Crude Quantity Theory

A basic hypothesis regarding the relationship between the quantity of money in an economy and its level of prices.

Constant

A value that remains unchanged throughout the scope of an equation, analysis, or experiment.