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If the money supply is equal to $500 billion and the monetary base is equal to $250 billion, the
money multiplier is equal to ____.
A) 2
B) 0.5
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
The equation linking the monetary base to the levels of chequable deposits and currency is
____.
A) MB = (r × D) + C
B) MB = (r + D) + ER + C
C) MB = (r/D) + ER + C
D) MB = (r - D) + ER - C
Answer: A
Diff: 2 Type: MC Page Ref: 392
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
When currency is equal to $100 billion and reserves are equal to $200 billion, and we know
that the money multiplier is equal to 2.5, then the money supply will be equal to ____.
A) $750 billion
B) $250 billion
C) $300 billion
D) $450 billion
Answer: A
Diff: 2 Type: MC Page Ref: 392
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
When currency is equal to $200 billion and reserves are equal to $350 billion, and we know
that the money multiplier is equal to 1.5, then the money supply will be equal to ____.
A) $825 billion
B) $225 billion
C) $366.66 billion
D) $500 billion
Answer: A
Diff: 2 Type: MC Page Ref: 392
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