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An increase in the monetary base that goes into ____ is not multiplied, while an increase
that goes into ____ is multiplied.
A) deposits; currency
B) excess reserves; currency
C) currency; excess reserves
D) currency; deposits
Answer: D
Diff: 1 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 the monetary base is equal to $200 billion, the desired reserve ratio is 0.10 and the
currency ratio is equal to 0.20, the money supply is equal to ____.
A) $800 billion
B) $600 billion
C) $500 billion
D) $300 billion
Answer: A
Diff: 2 Type: MC Page Ref: 393
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 the monetary base is equal to $200 billion, the desired reserve ratio is 0.10 and the
currency ratio is equal to 0.20, the money multiplier is equal to ____ and the money supply
is equal to ____.
A) 4; $800 billion
B) 3.67; $734 billion
C) 4; $734 billion
D) 3.67; $800 billion
Answer: A
Diff: 3 Type: MC Page Ref: 393
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