A reduction in money growth,holding all other factors constant,will cause
A)a reduction in seignorage.
B)an increase in seignorage.
C)no change in seignorage.
D)an ambiguous effect on seignorage.

Question

Quizplus · Accepted Answer

Seignorage is the profit that a government makes from issuing currency. A reduction in money growth means fewer new currency units are being issued, which decreases the amount of seignorage the government can collect. Therefore, there will be a reduction in seignorage.

A Reduction in Money Growth,holding All Other Factors Constant,will Cause