If the Monetary Base Fell and the Currency-Deposit Ratio Rose

question 65

Multiple Choice

If the monetary base fell and the currency-deposit ratio rose but the reserve-deposit ratio remained the same, then:

• A) the money supply would fall, but not by as much as it would have fallen if the reserve-deposit ratio had risen.
• B) the money supply would fall, but not by as much as it would have fallen if the reserve-deposit ratio had fallen.
• C) the money supply would fall more than it would have fallen if the reserve-deposit ratio had risen.
• D) it is impossible to be certain whether the money supply would fall or rise in this case.

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