Consider a closed economy whose central bank decides to reduce the monetary base by $40 million, leading to a reduction in the money supply of $50 million, all else being equal. Given that the reserve requirement coefficient (θ) is 75%, indicate for each of the following statements whether it is correct by checking the appropriate box: Multiple Choice a) The coefficient of holding money in fiduciary form is 20% ; b) The coefficient of holding money in fiduciary form is 25%; c) The decrease in the monetary base has been implemented through an increase in the discount rate; d) The volume of money creation could be implemented in particular through the resale of Treasury bills, held by a commercial bank, to another commercial bank; e) None of the above statements is correct. check one or more answers
Consider a closed economy whose central bank decides to reduce the monetary base by $40 million, leading to a reduction in the money supply of $50 million, all else being equal. Given that the reserve requirement coefficient (θ) is 75%, indicate for each of the following statements whether it is correct by checking the appropriate box:
Multiple Choice
a) The coefficient of holding money in fiduciary form is 20% ;
b) The coefficient of holding money in fiduciary form is 25%;
c) The decrease in the monetary base has been implemented through an increase in the discount rate;
d) The volume of money creation could be implemented in particular through the resale of Treasury bills, held by a commercial bank, to another commercial bank;
e) None of the above statements is correct.
check one or more answers
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