If the Ratio of Reserves to Deposits (Rr) Increases, While

question 44

Multiple Choice

If the ratio of reserves to deposits (rr) increases, while the ratio of currency to deposits (cr) is constant and the monetary base (B) is constant, then:

• A) it cannot be determined whether the money supply increases or decreases.
• B) the money supply increases.
• C) the money supply decreases.
• D) the money supply does not change.