You Are Given the Following Information About the Economy of Nocoin

question 23

Multiple Choice

You are given the following information about the economy of Nocoin: The banks have deposits of $300 billion.Their reserves are $15 billion, two thirds of which is in deposits with the bank.Households and firms hold $30 billion in bank notes.There are no coins!
The banks have no excess reserves.
The Bank of Nocoin, the central bank, increases bank reserves by $0.5 billion.The quantity of money _______.
The change in the quantity of money is not equal to the change in the monetary base because _______.
The money multiplier is _______.

• A)increases; the monetary base includes bank deposits; 7.0
• B)increases; when bank reserves increase, banks loan out their excess reserves and a multiplier process ensues; 7.33
• C)decreases; an increase in monetary base brings about a decrease in the quantity of money; 7.33
• D)decreases; money includes currency, but the monetary base does not include currency; 7.0
• E)increases; the components of the monetary base are not the components of the quantity of money; 7.0

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Definitions:

Increased Job Creation

The process of generating more employment opportunities within an economy or a specific sector.

Competitive Advantage

The unique attributes or circumstances that allow an organization to outperform its competitors.

Tangible Assets

Refers to physical and material assets that an organization owns, such as buildings, machinery, and inventory.

Human Capital

The sum of employees' knowledge, skills, experience, and commitment invested in the organization.