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

question 91

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.If the banks' desired reserve-deposit ratio increases from 10% to 15% and the public continues to hold the same amount of currency,the money supply in Macroland will

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

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Definitions:

Unselfish Behavior

Actions that prioritize the welfare of others over one's own personal benefit.

Economic System

A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem; a method of organizing an economy, of which the market system and the command system are the two general types.

Institutional Arrangements

The formal and informal rules, organizations, and practices that structure economic, political, and social interactions in societies.

Coordinating Mechanism

A system or method used to align actions and activities among different parties to achieve a common goal or objective.