Scenario 29-1 The Monetary Policy of Tazi Is Controlled by the Country's

question 153

Multiple Choice

Scenario 29-1
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 Tazian dollar. Aggregate banking statistics show that collectively the banks of Tazi hold $375 million of required reserves, $225 million of excess reserves, have issued $7,500 million of deposits, and hold $750 million of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 29-1. Suppose that the Bank of Tazi changes the reserve requirement to 2 percent. Assuming that the banks still want to hold the same percentage of excess reserves what is the value of the money supply after banks adjust to the change in the reserve requirement?

• A)$12,000 million
• B)$4,500 million
• C)$12,150 million
• D)$12,725 million

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