30) If there is an increase in the amount of currency held outside banks, then t

Question

30) If there is an increase in the amount of currency held outside banks, then the A) monetary base will decrease B) quantity of money will inerease. C) quantity of money and the monetary base will decrease D) quantity of money will decrease. E) quantity of money will not change Chapter 12 31) The quantity of money demanded will decrease if the A) inflation rate decreases. B) nominal interest rate decreases C) real interest rate decreases. D) nominal interest rate increases E) price level rises 32) The lower the nominal interest rate, the A) greater the demand for money B) greater the quantity of money demanded. C) greater the quantity of money supplied D) smaller the demand for goods and services E) smaller the quantity of money demanded is the quantity of money demanded. 33) The A) lower, greater B) lower; smaller C) higher; greater D) more variable; smaller E) None of the above because the nominal interest rate does not influence the quantity of m the nominal interest rate, the

Explanation / Answer

30) d) quantity of money will decrease

According to the quantity theory of money due to excess of money in held outside the banks, the banks will have a shortage of the quantity of money with them leading to currency drain and diminish their reserves.

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