497 $
© 2014 Pearson Canada Inc.$- Recognizing the distinction between advances to banks and the nonborrowed monetary base,
the money supply model is specified as ____.
A) M = m × (MBn - BR)
B) M = m × (MBn + BR)
C) M = m + (MBn - BR)
D) M = m - (MBn + BR)
Answer: B
Diff: 2 Type: MC Page Ref: 394
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
During the Great Depression ____.
A) the currency-chequable deposits ratio increased sharply
B) the currency-chequable deposits ratio decreased sharply
C) the currency-chequable deposits ratio did not change, confirming that the theory of asset
demand provides the correct framework for understanding fluctuations in the currency-chequable
deposits ratio
D) the currency-chequable deposits ratio declined modestly, confirming that the theory of asset
demand provides the correct framework for understanding fluctuations in the currency-chequable
deposits ratio
Answer: A
Diff: 1 Type: MC Page Ref: 396
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
In the early 1930s, the currency ratio in the United States rose, as did the level of excess
reserves. Money supply analysis predicts that, all else constant, the money supply should have
____.
A) risen
B) fallen
C) remain unchanged
D) Any of the above are possible, since the two factors work in opposite directions.
Answer: B
Diff: 1 Type: MC Page Ref: 396
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