Question 1

Everything else held constant,an increase in the interest rate paid on checkable deposits will cause ________ in the amount of checkable deposits held relative to currency holdings and ________ in the currency ratio.

Accepted Answer

When the interest rate paid on checkable deposits increases, people are more likely to hold their money in checkable deposits instead of cash (currency holdings). This results in an increase in the amount of checkable deposits held relative to currency holdings. However, since people are holding more checkable deposits, the proportion of currency holdings compared to checkable deposits (the currency ratio) decreases.

Question 2

The steepest increase in the currency ratio since 1892 occurred during

Accepted Answer

The steepest increase in the currency ratio since 1892 occurred during the Great Depression, a period of severe economic decline worldwide that lasted from the late 1920s to the early 1940s. This was a time of deflation, with prices for goods and services falling and unemployment levels rising, which led to a higher currency ratio as people hoarded cash and banks reduced their lending.

Question 3

The increase in the currency ratio during World War II was due to

Accepted Answer

During World War II, the increase in the currency ratio was mainly due to high taxes and illegal activities. The government increased taxes to finance the war effort, and individuals turned to illegal activities such as tax evasion and black market transactions to avoid paying these high taxes. As a result, people were holding more currency rather than depositing it in banks, which led to a decrease in the deposit-to-currency ratio.

Question 4

The increase in the availability of ATM's has caused the cost of acquiring currency to ________ which will cause the currency ratio to ________,everything else held constant.

Accepted Answer

The increase in availability of ATM's has made it easier for people to obtain currency, thus lowering the cost of acquiring currency. This will cause the currency ratio to increase as people will now have more currency on hand.

Question 5

The factor accounting for the steepest rise in the currency ratio since 1892 is

Accepted Answer

The answer of The factor accounting for the steepest rise...

Quiz 14: The Money Supply Process

Everything else held constant,an increase in the interest rate paid on checkable deposits will cause in the amount of checkable deposits held relative to currency holdings and in the currency ratio.

The steepest increase in the currency ratio since 1892 occurred during

The increase in the currency ratio during World War II was due to

The increase in the availability of ATM's has caused the cost of acquiring currency to which will cause the currency ratio to ,everything else held constant.

The factor accounting for the steepest rise in the currency ratio since 1892 is