the economics of money, banking, and financial markets

(Sean Pound) #1
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  1. If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable
    deposits are $1000 billion, and excess reserves total $1 billion, then the money supply is
    ____.
    A) $10,000 billion
    B) $4000 billion
    C) $1400 billion
    D) $10,400 billion
    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




  2. If the desired reserve ratio is ten percent, currency in circulation is $400 billion, and
    chequable deposits are $1000 billion, then the money multiplier is approximately ____.
    A) 2.5
    B) 2.8
    C) 2.0
    D) 0.7
    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




  3. If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable
    deposits are $1000 billion, and excess reserves total $1 billion, then the currency ratio is
    ____.
    A) .25
    B) .50
    C) .40
    D) .05
    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



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