Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 29 - Part X - The Monetary System - Quick Check Multiple Choice - Page 630: 6

Answer

a. more, more

Work Step by Step

When households hold currency and banks hold excess reserves, the money supply decreases. When less money is being loaned out and spent and rather saved and reserved, the money supply cannot grow. The money supply will grow through expansionary policies, such as lowering interest rates to allow banks to loan out more money for spending.
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