Question at position 11 The money supply is ________ related to expected deposit outflows, and is ________ related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively单项选择题
A
negatively; negatively
B
positively; positively
C
positively; negatively
D
negatively; positively

Question

Question at position 11 The money supply is related to expected deposit outflows, and is related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively单项选择题

A

negatively; negatively

B

positively; positively

C

positively; negatively

D

negatively; positively

BlackTom AI · Accepted Answer

Expected deposit outflows raise banks’ precautionary holdings of excess reserves, which reduces the money supply, so the first blank is “negatively.” Use the money multiplier to see the second part. Relevant concepts: - Money supply M = money multiplier m times monetary base MB: M = m · MB. - The simple multiplier m = (1 + c) / (rr + e + c), where c = currency/deposit ratio, rr = required reserve ratio, e = excess reserves/deposits. - Expected deposit outflows raise e (and possibly c), increasing the denominator and lowering m → lower M. - Market interest rate affects banks’ opportunity cost of holding excess reserves: higher market rates raise the return on loans/securities, so banks reduce e, lowering the denominator and raising m → higher M. Step-by-step reasoning and intermediate steps: 1. Write M = m · MB and m = (1 + c) / (rr + e + c). 2. If expected deposit outflows increase, then e increases: ∂m/∂e = −(1 + c)/(rr + e + c)^2 < 0. Therefore ∂M/∂(expected outflows) < 0. Money supply is negatively related to expected outflows. 3. Let market interest rate be r. Higher r makes holding reserves more costly, so e = e(r) with de/dr < 0. By chain rule, dm/dr = (∂m/∂e)(de/dr). Since ∂m/∂e < 0 and de/dr < 0, dm/dr > 0. Thus ∂M/∂r = MB·dm/dr > 0: money supply is positively related to the market interest rate. Why the correct answer is correct: - Algebra and economic intuition both show expected outflows reduce the multiplier and M, while higher market rates reduce excess reserves and increase the multiplier and M. Why other options are wrong: - “Negatively; negatively”: wrong because higher market rates typically reduce excess reserves and thus raise, not lower, money supply. - “Positively; positively”: wrong because expected outflows reduce reserves and the multiplier, so the relation is negative, not positive. - “Positively; negatively”: wrong on both counts: expected outflows do not increase M, and higher market rates do not reduce M. Conclusion: The money supply is negatively related to expected deposit outflows and positively related to the market interest rate—matching the provided answer “negatively; positively.”

Question at position 11 The money supply is related to expected deposit outflows, and is related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively单项选择题

类似问题

If the government finances spending by issuing debt to the public, the monetary base and money supply will:

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Which is NOT in M2?

Question at position 19 The money supply is related to expected deposit outflows, and is related to the market interest rate.positively; negatively negatively; negativelynegatively; positivelypositively; positively

Question at position 9 Decisions by about their holdings of currency and by about their holdings of excess reserves affect the money supply. banks; depositors depositors; borrowers depositors; banksborrowers; depositors

Question at position 8 Decisions by about their holdings of currency and by about their holdings of excess reserves affect the money supply. borrowers; depositorsdepositors; borrowers banks; depositors depositors; banks

Question at position 8 If the required reserve ratio is 10%, currency in circulation is $300 billion, checkable deposits are $900 billion, and excess reserves total $1 billion, then the money supply is ________ billion. $2700$1200$1800$3000$3100

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Question at position 11 The money supply is ________ related to expected deposit outflows, and is ________ related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively单项选择题

类似问题

If the government finances spending by issuing debt to the public, the monetary base and money supply will:

If banks choose to increase their excess reserves, the money supply will:

The money supply is determined by:

Which is NOT in M2?

Question at position 19 The money supply is ________ related to expected deposit outflows, and is ________ related to the market interest rate.positively; negatively negatively; negativelynegatively; positivelypositively; positively

Question at position 9 Decisions by ________ about their holdings of currency and by ________ about their holdings of excess reserves affect the money supply. banks; depositors depositors; borrowers depositors; banksborrowers; depositors

Question at position 8 Decisions by ________ about their holdings of currency and by ________ about their holdings of excess reserves affect the money supply. borrowers; depositorsdepositors; borrowers banks; depositors depositors; banks

Question at position 8 If the required reserve ratio is 10%, currency in circulation is $300 billion, checkable deposits are $900 billion, and excess reserves total $1 billion, then the money supply is ________ billion. $2700$1200$1800$3000$3100

更多留学生实用工具

希望你的学习变得更简单

Question at position 11 The money supply is related to expected deposit outflows, and is related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively单项选择题

Question at position 19 The money supply is related to expected deposit outflows, and is related to the market interest rate.positively; negatively negatively; negativelynegatively; positivelypositively; positively

Question at position 9 Decisions by about their holdings of currency and by about their holdings of excess reserves affect the money supply. banks; depositors depositors; borrowers depositors; banksborrowers; depositors

Question at position 8 Decisions by about their holdings of currency and by about their holdings of excess reserves affect the money supply. borrowers; depositorsdepositors; borrowers banks; depositors depositors; banks