Answer to Question #117774 in Macroeconomics for Kwasi Boateng

Question

Monetary base is defined as currency in circulation plus banks' deposits at the central bank.
(a).Give an example of an event that could lead to an increase in the amount of monetary base needed to make a given amount of transactions?

(b). Is it plausible to make purchases without using monetary base?Illustrate your answer(s) with relevant examples

Answer 1

a)

Demand for loans increased which resulted in an additional issue of money.

b) Barter. Country A made a deal to supply gas to country B in exchange for wood supply.