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

---

Definitions:

Sick Role Behaviors

Actions and behaviors that individuals adopt when they are ill, which can include seeking medical help, taking time off work, and following treatment plans.

African Americans

A racial or ethnic group in the United States characterized by an ancestry from the native populations of Sub-Saharan Africa.

European Americans

Individuals residing in the United States who are of European descent, making up a significant portion of the country’s demographic composition.

Lay Referral Network

A system through which individuals seek advice, information, and treatment for health problems from non-professional sources within their community.