If the Volume of Discount Loans Increases by $2 Billion

question 56

Multiple Choice

If the volume of discount loans increases by $2 billion, the monetary base will increase by

• A)$2 billion times the money multiplier.
• B)$2 billion divided by the money multiplier.
• C)$2 billion.
• D)an amount that can be determined only if the ratio of excess reserves to checkable deposits is known.

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Definitions:

Transfer Payment

A payment made by governments to individuals without any services or goods being received in return, often part of social welfare programs.

Old-Age Pensions

Retirement benefits provided by the government, employers, or other institutions to support individuals financially after they retire.

Military Expenditures

The funds spent by a country on its military forces, including salaries, equipment, and operations.

Marginal Tax Rate

The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify, essentially the rate paid on the last dollar of your income.