Question : 81) If the currency drain ratio zero, which of the : 1227831

 

 

81) If the currency drain ratio is zero, which of the following situations leads to the greatest total increase in the quantity of money?

A) an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent

B) an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent

C) an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent

D) an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent

E) an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent

Answer:  A

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  CT

82) The Fed buys $50,000 of government securities. The desired reserve ratio is 10 percent and the currency drain ratio is zero. What will be the change in the quantity of money?

A) $5,000

B) $50,000

C) $500,000

D) $5,000,000

E) $0

Answer:  C

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  CT

 

83) The Fed buys $25,000 of government securities. The desired reserve ratio is 20 percent and the currency drain ratio is zero. What will be the change in the quantity of money?

A) $5,000

B) $20,000

C) $25,000

D) $125,000

E) $50,000

Answer:  D

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  TPS

 

84) If the desired reserve ratio is 10 percent and there is no currency drain, then a $100 increase in the monetary base leads the banking system to increase the quantity of money by

A) $1,000.

B) $400.

C) $900.

D) $110.

E) $1,100.

Answer:  A

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  NAU

85) Suppose the desired reserve ratio is 20 percent and there is no currency drain. Then a $1 increase in the monetary base leads to the banking system to increase the quantity of money by

A) $0.02.

B) $4.

C) $5.

D) $20.

E) $2.

Answer:  C

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  DMC

 

86) Suppose the desired reserve ratio is 10 percent and there is no currency drain. Then a $200 increase in the monetary base results in the banking system increasing the quantity of money by

A) $200.

B) $2,000.

C) $20.

D) $10.

E) $2,190.

Answer:  B

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  DMC

 

87) If the required reserve ratio is 15 percent, there is no currency drain, and banks loan all of their excess reserves, an increase in the monetary base of $20,000 leads to a total increase in the quantity of money of

A) $3,000.

B) $20,000.

C) $133,333.

D) $200,000.

E) $300,000.

Answer:  C

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  MR

88) The Fed conducts an open market purchase of securities of $5,000. If the currency drain ratio is 0 percent and the desired reserve ratio is 10 percent, then the total increase in the quantity of money is

A) $5,000.

B) $20,000.

C) $50,000.

D) $10,000.

E) $4,000.

Answer:  C

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  NAU

 

89) Suppose the Fed sells $100 of government securities. If the desired reserve ratio is 20 percent and there is no currency drain, then the quantity of money

A) decreases by $100.

B) decreases by $500.

C) decreases by $400.

D) increases by $100.

E) decreases by $80.

Answer:  B

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  NAU

 

90) The Fed buys $20,000 of government securities. The desired reserve ratio is 5 percent and the currency drain ratio is zero. What will be the change in the quantity of money?

A) $20,000

B) $400,000

C) $399,980

D) $19,000

E) $5,000

Answer:  B

Topic:  Money multiplier

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  WM