Which of the Following Monetary Policies Will Have an Indeterminate

question 90

Multiple Choice

Which of the following monetary policies will have an indeterminate effect on the money supply of an economy?

• A)A combination of an increase in the discount rate and an open market sale of government securities
• B)A combination of a decrease in the discount rate and an increase in reserve requirements
• C)A combination of an increase in both the discount rate and reserve requirements
• D)A combination of purchases of government securities and a decrease in reserve requirements
• E)A combination of sales of government securities and an increase in reserve requirements

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Definitions:

Interest Rate

The proportion, in percentage, charged on the total amount borrowed or earned on the deposited amount over a specific time period.

Borrowed

Something obtained or received temporarily with the intention of returning it or its equivalent value.

Interest

The expense associated with lending money or the profit from an investment, usually shown as a percentage.

Days

A unit of time equivalent to 24 hours, generally used to measure durations and intervals.