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A simple deposit multiplier equal to one implies a desired reserve ratio equal to ____.
A) 100 percent
B) 50 percent
C) 25 percent
D) 0 percent
Answer: A
Diff: 1 Type: MC Page Ref: 388
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
A simple deposit multiplier equal to two implies a desired reserve ratio equal to ____.
A) 100 percent
B) 50 percent
C) 25 percent
D) 0 percent
Answer: B
Diff: 1 Type: MC Page Ref: 388
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
A simple deposit multiplier equal to four implies a desired reserve ratio equal to ____.
A) 100 percent
B) 50 percent
C) 25 percent
D) 0 percent
Answer: C
Diff: 1 Type: MC Page Ref: 388
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
In the simple deposit expansion model, if the banking system has excess reserves of $75, and
the desired reserve ratio is 20 percent, the potential expansion of chequable deposits is
____.
A) $75
B) $750
C) $37.50
D) $375
Answer: D
Diff: 1 Type: MC Page Ref: 388
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