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

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Definitions:

Three-Wire

Refers to an electrical circuit or cable that consists of three conductors, which can be used in various applications including power supply and control circuits.

Motor Starter

A device or system that controls the use of electrical power to equipment, especially motors, preventing damage by controlling the electrical power for starting the motor.

Maintained Contact

A switch mechanism that keeps or maintains its position (either on or off) until manually changed or actuated.

Momentary Contact

Momentary contact refers to an electrical switch or relay contact that only completes the circuit while being physically engaged or pressed.