The money supply is ________ related to the nonborrowed monetary base,and ________ related to the level of borrowed reserves.

Question

Quizplus · Accepted Answer

The money supply is positively related to the nonborrowed monetary base because as the nonborrowed monetary base increases, it provides more base money for banks to lend, thereby increasing the money supply. It is also positively related to the level of borrowed reserves because as banks borrow more from the central bank, they have more funds to lend, which also increases the money supply.

The Money Supply Is ________ Related to the Nonborrowed Monetary