You Are Given the Following Information About the Economy of Nocoin

question 8

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

Comprehend the circumstances under which a person is discharged from liability on a negotiable instrument.

Understand the process and implications of alteration and forgery in negotiable instruments.

Learn the requirements and implications of indorsement and negotiation in the context of transfers and liabilities.

Distinguish between primary and secondary liability on a negotiable instrument.

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Definitions:

Office Building

A structure designed for administrative or professional activities, often housing offices for various businesses or services.

Accrual-Basis Accounting

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Financial Statements

Reports that summarize the financial activities of a business, including the balance sheet, income statement, and cash flow statement.

Recognized

In accounting, recognized refers to the formal acknowledgment of a financial transaction or event in the financial statements of a business.