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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 monetary base is ____.
A) $300 billion
B) $600 billion
C) $333 billion
D) $667 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
When the nonborrowed monetary base is equal to $200 billion, the borrowed reserves are
equal to $100 billion, and the money supply is equal to $700 billion, the money multiplier is
____.
A) 2.33
B) 2.67
C) 2.23
D) 2.16
Answer: A
Diff: 3 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
The relationship between advances to banks, the nonborrowed monetary base, and the
monetary base is ____.
A) MB = MBn - BR
B) BR = MBn - MB
C) BR = MB - MBn
D) MB = BR - MBn
Answer: C
Diff: 1 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