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:

Sugar Act

A law enacted by the British Parliament in 1764 aiming to raise revenue from the American colonies by imposing a tax on sugar and molasses imported into the colonies.

Stamp Act

A 1765 British law imposing a tax on all paper documents in the American colonies, leading to widespread protest and contributing to the American Revolution.

Sugar Act

A law enacted by the British Parliament in 1764 aiming to raise revenue from the American colonies by imposing a tax on sugar and molasses imported from non-British territories.

Jury Trial

A legal procedure in which a jury made up of citizens determines the outcome of a case, based on evidence presented, in both civil and criminal trials.