Question :
71) A currency drain ________ the amount of bank reserves : 1240454
71) A currency drain ________ the amount of bank reserves available to banks to make loans because ________.
A) reduces; people are holding more money outside of the banks
B) increases; people are holding less money outside of the banks
C) reduces; people are holding less money outside of the banks
D) reduces the monetary base; people are holding more money outside of the banks
E) reduces; people are holding onto the money the banks could have borrowed from the Fed
72) Suppose the Federal Reserve buys $50 million worth of securities from a commercial bank. As a result, the monetary base ________, and the quantity of money will ________ $50 million due to the ________.
A) increases; increase by more than; money multiplier
B) decreases; decrease by more than; money multiplier
C) increases; increase by more than; expenditure multiplier
D) decreases; decrease by less than; expenditure multiplier
E) increases; decrease by; currency drain
73) The money multiplier is the
A) fraction of the monetary base that is kept in currency.
B) factor by which a change in the monetary base is multiplied to give the change in the quantity of money.
C) factor by which a change in the deposits base is multiplied to give the change in the monetary base.
D) proportion by which a change in the quantity of money changes the monetary base.
E) number of times that the Fed conducts open market operations in a month.
74) The number by which a change in the monetary base is multiplied to find the resulting change in the quantity of money is called the
A) desired reserve ratio.
B) money multiplier.
C) currency multiplier.
D) currency drain.
E) open market operation.
75) If the money multiplier is 3.0, a $1,000 increase in the monetary base
A) increases quantity of money by $3,000.
B) decreases quantity of money by $3,000.
C) increases the monetary base by $300.
D) increases the money multiplier by 3 percent.
E) decreases the quantity of money by 3 percent.
76) C/D is the currency drain ratio and R/D is the desired reserve ratio. The money multiplier equals
A) .
B) .
C) .
D) .
E) .
77) The Fed purchases $1 million of U.S. government securities from First Bank. The desired reserve ratio is 10 percent, the currency drain ratio is zero, and banks loan all excess reserves. The money multiplier is equal to
A) 0.10.
B) 1.0.
C) 10.0.
D) 100.0.
E) $1 million.
78) Suppose the currency drain ratio is 33.33 percent and the desired reserve ratio is 10 percent. The money multiplier equals
A) 4.27.
B) 3.00.
C) 3.08.
D) 2.50.
E) 6.67.
79) If the currency drain ratio is 0.2 and the desired reserve ratio is 0.03, the money multiplier is
A) 0.76.
B) 6.67.
C) 3.23.
D) 4.46.
E) 5.22.
80) Suppose the currency drain ratio is 25 percent and the desired reserve ratio is 20 percent. The money multiplier equals
A) 4.00.
B) 3.00.
C) 2.78.
D) 2.00.
E) 5.42.
