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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