7. Suppose the Federal Reserve decreases the interest paid on reserves held by banks, and households hold less cash as they use debit cards for more purchases. a. Money supply would increase as the multiplier increases b. Money supply would increase as the base increases c. Money supply would decrease as the multiplier decreases d. Money supply would decrease as the base decreases e. Money supply direction is ambiguous.
7. Suppose the Federal Reserve decreases the interest paid on reserves held by banks, and households hold less cash as they use debit cards for more purchases. a. Money supply would increase as the multiplier increases b. Money supply would increase as the base increases c. Money supply would decrease as the multiplier decreases d. Money supply would decrease as the base decreases e. Money supply direction is ambiguous.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Monetary System
Section: Chapter Questions
Problem 2CQQ
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