Suppose That in Mysore,the Reserve-Deposit Ratio Is Res = 0

question 66

Multiple Choice

Suppose that in Mysore,the reserve-deposit ratio is res = 0.5 - 2i,where i is the nominal interest rate.The currency-deposit ratio is 0.2 and the monetary base equals 100.The real quantity of money demanded is given by the money demand function L(Y,i) = 0.5Y - 10i,where Y is real output.Currently,the real interest rate is 5% and the economy expects an inflation rate of 5%.The money multiplier equals

• A)2.00.
• B)2.40.
• C)3.00.
• D)4.00.

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Definitions:

Safety Stock

An additional quantity of an item held in inventory to reduce the risk of stockouts due to uncertainties in demand or supply.

Budgeted Production

An estimate of the quantity of products or services a business plans to produce over a certain period, used for planning and control purposes.

Sales Budget

An estimate of the sales revenue and sales volume expected for a future period, forming a basis for other business planning.

Accumulated Depreciation

The total depreciation that has been recorded for an asset since its acquisition, reflecting its reduction in value over time.