Scenario 29-2. The Monetary Policy of Tazi Is Controlled by the Country's

question 39

Multiple Choice

Scenario 29-2.
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi.The local unit of currency is the taz.Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves,75 million tazes of excess reserves,have issued 7,500 million tazes of deposits,and hold 225 million tazes of Tazian Treasury bonds.Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 29-2.Suppose the Bank of Tazi loaned the banks of Tazi 10 million tazes.Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same.By how much would the money supply change?

• A)250 million tazes
• B)200 million tazes
• C)125 million tazes
• D)None of the above is correct.

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Definitions:

McCulloch V. Maryland

A landmark Supreme Court case in which it was decided that the United States government had the authority to establish a national bank and that states could not tax federal institutions.

States' Rights

The rights and powers held by individual US states rather than by the federal government.

Constitutional Obligations

Refers to the duties and responsibilities mandated by a constitution that must be fulfilled by the government or its citizens.

Confederal System

A confederal system is a form of government where autonomous states or regions come together to form a loose federation, retaining most of the governance power while delegating limited powers to a central authority.