Answer to Question #16184 in Economics of Enterprise for a n m

Question

Which of the following would cause a growth in the money supply? If your answer is ‘possibly’ explain the circumstances under which the answer would be ‘yes’.

(a) The selling of government securities to banks. . Yes / No / Possibly

(b) A fall in interest rates. Yes / No / Possibly

(c) An increase in government expenditure, financed by borrowing from the banking sector.
Yes / No / Possibly

(d) A cut in taxes. Yes / No / Possibly

(e) The purchase of government securities by the Reserve Bank from the banking sector.
Yes / No / Possibly

(f) It is agreed by the Treasurer and the Governor of the Reserve Bank to
reduce the target rate of inflation Yes / No / Possibly

(g) GDP rises and there is an upward-sloping money supply curve (with respect to interest rates).
Yes / No / Possibly

Answer 1

Answer:
a) No
b) Yes
c) Yes
d) Yes
e) No
f) No
g) Yes