At One Time,people in a Certain Country Had No Access

question 28

Multiple Choice

At one time,people in a certain country had no access to banks;they relied exclusively on currency.Then,a fractional-reserve banking system was created.As a result,the money supply

• A)increased.The central bank could have reduced the size of this increase by buying bonds.
• B)increased.The central bank could have reduced the size of this increase by selling bonds.
• C)decreased.The central bank could have reduced the size of this decrease by buying bonds.
• D)decreased.The central bank could have reduced the size of this decrease by selling bonds.

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Definitions:

Interest Rates

Interest rates are the cost of borrowing money or the reward for saving, typically expressed as a percentage of the principal for a specified period.

S&P Rating

A credit rating given by Standard & Poor's, evaluating the creditworthiness of a borrower, ranging from AAA (excellent) to D (in default).

Investment Grade

A credit rating indicating a low risk of default, used to classify bonds that are considered safe investments.

BBB

A bond credit rating given to a medium credit quality debt instrument, indicating moderate risk.