Answer to Question #93533 in Macroeconomics for Lesego

Question

An increase in money supply could result if there is
[1] a decrease in import payments
[2] an increase in capital outflows
[3] a decrease in export earnings
[4] an increase in government’s deposits with the reserve bank

Answer 1

An increase in money supply could result if there is a decrease in import payments, because less money flow out of the country.

So, the correct answer is 1.