Which of the Following Best Completes the Statement? If People

question 63

Multiple Choice

Which of the following best completes the statement? If people increase their currency holdings, all else the same, the monetary base:

• A)Does not change but the quantity of M2 will decrease
• B)Increases as does the quantity of M2
• C)Decreases as does the quantity of M2
• D)Does not change and neither does M2

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Definitions:

Deficit

The amount by which expenses or costs exceed income or revenues, commonly associated with governmental budgeting.

Current Account

A component of a country's balance of payments that measures the trade in goods and services, net income from abroad, and net current transfers.

Deficit

The amount by which expenses exceed income or costs outstrip revenues, typically referring to governmental budgeting.

British Importer

A company or individual in the UK that buys goods from foreign countries to sell in the domestic market.