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If the desired reserve ratio is one-third, currency in circulation is $300 billion, and chequable
deposits are $900 billion, then the money supply is ____.
A) $2700
B) $3000
C) $1200
D) $1800
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
If the desired reserve ratio is one-third, currency in circulation is $300 billion, and chequable
deposits are $900 billion, then the money multiplier is approximately ____.
A) 2.5
B) 2.8
C) 2.0
D) 0.67
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
If the desired reserve ratio is one-third, currency in circulation is $300 billion, and chequable
deposits are $900 billion, then the currency ratio is ____.
A) .25
B) .33
C) .67
D) .375
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
If the desired reserve ratio is one-third, currency in circulation is $300 billion, and chequable
deposits are $900 billion, then the level of excess reserves in the banking system is ____.
A) $300 billion
B) $30 billion
C) $3 billion
D) 0
Answer: D
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