In Macroland,there Is $1,000,000 in Currency That Can Either Be

question 22

Multiple Choice

In Macroland,there is $1,000,000 in currency that can either be held by the public or used by banks as reserves.The banks' desired reserve-deposit ratio is 10%.If the public of Macroland decides to hold less currency,decreasing the proportion they hold from 50% to 25%,the money supply in Macroland will

• A) increase.
• B) decrease.
• C) remain the same.
• D) may either increase or decrease.
• E) will increase initially,but then return to the original level.

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Definitions:

Position

Refers to the amount of a specific security, commodity or currency that is owned or controlled by an individual or entity.

Correlation

A statistical measure indicating the extent to which two variables change together.

Indices

Benchmarks or measures that track the performance of a specific basket of stocks, bonds, or other investment vehicles.

Period

A span of time during which certain events or conditions exist or take place, often used in reference to financial reporting, investment intervals, or cycles.