the economics of money, banking, and financial markets

492 $

© 2014 Pearson Canada Inc.$

17. 
    

    If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable
    deposits are $800 billion, and excess reserves total $0.8 billion, then the monetary base is
    ____.
    A) $480 billion
    B) $480.8 billion
    C) $80 billion
    D) $80.8 billion
    Answer: B
    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

    
    


18. 
    

    If the desired reserve ratio is fifteen percent, currency in circulation is $400 billion, and
    chequable deposits are $800 billion, then the money multiplier is approximately ____.
    A) 2.5
    B) 1.67
    C) 2.3
    D) 0.651
    Answer: C
    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

    
    


19. 
    

    If the desired reserve ratio is five percent, currency in circulation is $400 billion, and
    chequable deposits are $800 billion, then the money multiplier is approximately ____.
    A) 2.5
    B) 2.72
    C) 2.3
    D) 0.551
    Answer: B
    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