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:

Coelomic Cavity

The Coelomic Cavity is a fluid-filled body cavity within organisms that is lined by a tissue derived from mesoderm, providing space for the internal organs and allowing them to move independently.

Cloacal

Relating to the cloaca, a common cavity at the end of the digestive tract for the release of both excretory and genital products in vertebrates such as birds, reptiles, amphibians, and some fish.

Early Digestive Tract

Refers to the initial sections of the digestive system where the breakdown of food begins, including the mouth, esophagus, and stomach.

Evaginations

The process of forming an outpouching or protrusion of a structure or tissue.