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单项选择题
A
borrowers; depositors
B
depositors; borrowers
C
banks; depositors
D
depositors; banks

Question

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单项选择题

A

borrowers; depositors

B

depositors; borrowers

C

banks; depositors

D

depositors; banks

BlackTom AI · Accepted Answer

Money supply is determined by how much currency the public holds and how many reserves banks choose to keep beyond required levels.

1) Relevant knowledge points and concepts
- Monetary base (MB) = currency held by the public (C) + reserves held by banks (R).
- Money supply (M) = currency held by the public + demand deposits = C + D.
- Currency-deposit ratio c = C/D (determined by the public or depositors).
- Reserve-deposit ratio r = R/D (determined by banks’ reserve policies, including excess reserves).
- Money multiplier m = M/MB = (1 + c) / (c + r).

2) Step-by-step reasoning
- Start with definitions: c = C/D and r = R/D.
- Express M and MB in terms of D: M = C + D = D(c + 1). MB = C + R = D(c + r).
- Divide to get the multiplier: m = M/MB = (D(c + 1)) / (D(c + r)) = (1 + c) / (c + r).
- The numerator (1 + c) depends on c (public’s currency preference). The denominator (c + r) includes r, which is set by banks’ reserve behavior.

3) Intermediate calculations (example)
- If c = 0.2 and r = 0.1, m = (1 + 0.2)/(0.2 + 0.1) = 1.2/0.3 = 4.
- If depositors increase currency holding to c = 0.4 (same r = 0.1), m = 1.4/0.5 = 2.8 (money supply falls for a given MB).
- If banks increase excess reserves to r = 0.2 (c = 0.2), m = 1.2/0.4 = 3 (money supply falls for a given MB).

4) Why the correct answer is correct
- The first blank asks who decides holdings of currency: that is depositors/the public (they choose to hold cash vs. deposits).
- The second blank asks who decides holdings of excess reserves: that is banks (they choose how much excess reserve to hold).
- Hence: depositors; banks.

5) Why other options are incorrect (brief)
- Any option naming borrowers is incorrect because borrowers do not collectively determine aggregate currency or reserve ratios.
- "Banks; depositors" reverses the roles: banks do not primarily determine public currency holdings, and depositors do not set banks’ excess-reserve behavior.

6) Conclusion
Therefore the correct choice is: depositors; banks — matching the provided answer.

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 11 The money supply is related to expected deposit outflows, and is related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively

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 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 11 The money supply is ________ related to expected deposit outflows, and is ________ related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively

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 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 11 The money supply is related to expected deposit outflows, and is related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively