An increase 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 refers to the revenue earned by the government from the issuance of currency. When there is an increase in money growth, it means that more money is being issued by the government, which results in an increase in seignorage revenue. Therefore, an increase in money growth will cause an increase in seignorage.

An Increase in Money Growth,holding All Other Factors Constant,will Cause