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Please state whether each of the following statements is TRUE or FALSE, and then explain your...

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Economics

  1. Please state whether each of the following statements is TRUE orFALSE, and then explain your choice briefly.

    Please start your answer by writing either TRUE or FALSE.Answers without that clear statement at the beginning, and withexcessively long (more than 2-3 short sentences) explanations willbe penalized.

    1. Banks can still influence the money supply if they are requiredto hold all deposits in reserve.

    2. In the months of November and December, people in the U.S. holda larger part of their money in the form of currency because theyintend to shop and travel for the holidays. As a result, otherthings the same, the money supply increases.

    3. Bank runs are only a concern under a fractional reserve bankingsystem.

    4. The money multiplier is lower when bankers are more cautious andhold excess reserves.

Answer & Explanation Solved by verified expert
4.3 Ratings (539 Votes)
Banks can still influence the money supply if they are required to hold all deposits in reserve FALSE Money supply is affected by teh money multiplier which is a function of reserve requirement If reserves are 100 money multiplier is 1 so banks wont be able to    See Answer
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