If the Monetary Base Does Not Change and the Desired

question 71

Multiple Choice

If the monetary base does not change and the desired reserve ratio increases,the money multiplier ________ and the quantity of money ________.

• A)increases;increases
• B)increases;decreases
• C)decreases;increases
• D)decreases;decreases
• E)decreases;does not change

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Definitions:

Economic Stability

A state in which financial markets and the economy are able to function efficiently and enduringly, free from extreme fluctuations.

National Output

National Output is the total value of all goods and services produced by an economy over a specific period, typically measured as GDP.

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Employment

The condition of having paid work, or the relationship between an employer and an employee where the employee provides labor in exchange for compensation.