Suppose That You Are the Central Bank President in a Developing

question 21

Multiple Choice

Suppose that you are the central bank president in a developing country which is predominantly agricultural.During planting season,c the proportion of demand deposits held as cash doubles,but you wish to keep the money supply constant.You may decide to

• A)reduce e and/or buy securities and/or lower the rediscount rate.
• B)increase e and/or buy securities and/or lower the rediscount rate.
• C)reduce e and/or sell securities and/or raise the rediscount rate.
• D)increase e and/or sell securities and/or raise the rediscount rate.

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Definitions:

Spatial Proximity

The physical closeness between objects or individuals, which can influence social interactions and perceptions of connectedness.

Interdependent

A relationship or condition in which entities rely on each other to have their needs met or to achieve a desired outcome.

Regular Basis

A term indicating that an action or activity occurs at consistent, repeated intervals.

Cognitive Dissonance

Feeling mentally unsettled due to the presence of two or more clashing beliefs, ideas, or values at the same time.