1. Which of the following would NOT cause a rise in the money supply (assume ceteris paribus)? A. An increase in government spending financed by borrowing from the central bank. B. The central bank imposes a reserve requirement (reserve ratio) on banks above their current ratio. C. A rise in demand for money and the central bank does not change interest rates. D. The central bank agreeing to swap toxic assets for cash (quantitative easing). E. All of the above.

1. Which of the following would NOT cause a rise in the money supply (assume ceteris paribus)? A. An increase in government spending financed by borrowing from the central bank. B. The central bank imposes a reserve requirement (reserve ratio) on banks above their current ratio. C. A rise in demand for money and the central bank does not change interest rates. D. The central bank agreeing to swap toxic assets for cash (quantitative easing). E. All of the above.

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 12PA

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