In Macroland, Currency Held by the Public Is 2,000 Econs

question 13

Multiple Choice

In Macroland, currency held by the public is 2,000 econs, bank reserves are 300 econs, and the desired (and current) reserve/deposit ratio is 15 percent. If commercial banks borrow 100 econs in reserves from the Central Bank through discount window lending, then the money supply in Macroland will ________, assuming that the public does not wish to change the amount of currency it holds.

• A)increase to 3,133 econs
• B)increase to 4,100 econs
• C)increase to 4,667 econs
• D)decrease to 1,900 econs

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Definitions:

Durham Rule

Legal principle stating that the presence of a mental disorder is sufficient to absolve an individual of responsibility for a crime.

American Law Institute (ALI) Rule

A guideline used in some jurisdictions for determining legal insanity, which considers whether a defendant lacks the capacity to understand the wrongfulness of their actions.

Irresistible Impulse Rule

Legal principle stating that even a person who knowingly performs a wrongful act can be absolved of responsibility if he or she was driven by an irresistible impulse to perform the act or had a diminished capacity to resist performing the act.

Insanity Defense Reform Act

A 1984 U.S. federal law that redefined criteria for establishing the insanity defense within federal courts.