Which of the following would cause a growth in the money supply? If your answer is ‘possibly’ explain the circumstances under which the answer would be ‘yes’.
(a) The selling of government securities to banks. . Yes / No / Possibly
(b) A fall in interest rates. Yes / No / Possibly
(c) An increase in government expenditure, financed by borrowing from the banking sector.
Yes / No / Possibly
(d) A cut in taxes. Yes / No / Possibly
(e) The purchase of government securities by the Reserve Bank from the banking sector.
Yes / No / Possibly
(f) It is agreed by the Treasurer and the Governor of the Reserve Bank to
reduce the target rate of inflation Yes / No / Possibly
(g) GDP rises and there is an upward-sloping money supply curve (with respect to interest rates).
Yes / No / Possibly
1
Expert's answer
2012-10-11T08:20:52-0400
Answer: a) No b) Yes c) Yes d) Yes e) No f) No g) Yes
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