487 $
© 2014 Pearson Canada Inc.$- In the model of the money supply process, the bank's role in influencing the money supply
process is represented by ____.
A) only the desired reserve ratio
B) both the desired reserve ratio and the market interest rate
C) only the currency ratio
D) only borrowed reserves
Answer: B
Diff: 2 Type: MC Page Ref: 391
Skill: Recall
Objective List: 16.2 Discern who controls the monetary base and what causes it to change
16.7 The Money Multiplier
The formula linking the money supply to the monetary base is ____.
A) M = m/MB
B) M = m × MB
C) m = M × MB
D) MB = M × m
Answer: B
Diff: 1 Type: MC Page Ref: 391
Skill: Recall
Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
central bank can control the level of deposits by setting the level of reserves
If the money multiplier is equal to 2 and the money supply is equal to $100 billion, the
monetary base is equal to ____.
A) $50 billion
B) $200 billion
C) $25 billion
D) cannot be determined
Answer: A
Diff: 1 Type: MC Page Ref: 391
Skill: Applied
Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
central bank can control the level of deposits by setting the level of reserves
If the money supply is equal to $400 billion and the monetary base is equal to $100 billion, the
money multiplier is equal to ____.
A) 4
B) 0.25
C) 5
D) cannot be determined
Answer: A
Diff: 1 Type: MC Page Ref: 391
Skill: Applied
Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
central bank can control the level of deposits by setting the level of reserves