Question 1

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

Accepted Answer

During World War II, the US government implemented high taxes and engaged in illegal activities like counterfeiting enemy currency to fund the war effort. This led to an increase in the currency ratio, which is the amount of currency in circulation relative to the amount of demand deposits (checking accounts) in banks. As people had less money to deposit in banks due to higher taxes and there was an increase in illegal activities, more currency was in circulation relative to demand deposits.

Question 2

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...

Question 3

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

An increase in the interest rate paid on checkable deposits will make them more attractive to hold, leading to an increase in the amount of checkable deposits held relative to currency holdings (thus, increasing the fraction of deposits to currency), as well as a decrease in the currency ratio.

Question 4

Everything else held constant,an increase in wealth will cause the holdings of checkable deposits to the holdings of currency to ________ and the currency ratio will ________.

Accepted Answer

When wealth increases, people tend to hold more money in checkable deposits relative to currency because deposits can earn interest or be used more conveniently for transactions. This means the ratio of checkable deposits to currency increases. However, the currency ratio (currency relative to deposits) decreases because a smaller proportion of a person's wealth is held in currency.

Question 5

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 the availability of ATM's has made acquiring currency easier and cheaper, leading to a decrease in the cost of acquiring currency. This, in turn, will cause the currency ratio to increase as people are more likely to hold a larger amount of currency now that it is more accessible.

Question 6

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, when the ratio increased from 7.7% in 1929 to 35% in 1945.

Quiz 14: The Money Supply Process

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

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

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.

Everything else held constant,an increase in wealth will cause the holdings of checkable deposits to the holdings of currency to and the currency ratio will .

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 steepest increase in the currency ratio since 1892 occurred during