An increase in the currency drain ratio
A)decreases the monetary base.
B)increases the quantity of money.
C)increases bank reserves.
D)does not change the amount of the monetary base.
E)does not change the quantity of money.

Question

Quizplus · Accepted Answer

An increase in the currency drain ratio means more currency is held by the public rather than deposited in banks, but it does not affect the total monetary base, which includes both currency in circulation and bank reserves.

An Increase in the Currency Drain Ratio