Factors That Determine the Money Supply
1) An increase in the nonborrowed monetary base, everything else held constant, will cause
A) the money supply to fall.
B) the money supply to rise.
C) no change in the money supply.
D) demand deposits to fall.
2) The money supply is ________ related to the nonborrowed monetary base, and ________ related to the level of borrowed reserves.
A) positively; negatively
B) negatively; not
C) positively; positively
D) negatively; negatively
3) The amount of borrowed reserves is ________ related to the discount rate, and is ________ related to the market interest rate.
A) negatively; negatively
B) negatively; positively
C) positively; negatively
D) positively; positively
4) A ________ in market interest rates relative to the discount rate will cause discount borrowing to ________.
A) fall; increase
B) rise; decrease
C) rise; increase
D) fall; remain unchanged