Question

Starting from a position where the nation's money demand equals the money supply and its balance of payments is in equilibrium its balance of payments would move into a surplus position if there occurred in the nation a (an)?

A decrease in the money supply Correct Answer Incorrect Answer
B increase in the money supply Correct Answer Incorrect Answer
C decrease in the money demand Correct Answer Incorrect Answer
D None of the above Correct Answer Incorrect Answer
E A and C Correct Answer Incorrect Answer

Solution

Starting from a position where the nation's money demand equals the money supply and its balance of payments is in equilibrium its balance of payments would move into a surplus position if there occurred in the nation a decrease in the money supply.

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