Scenario 21-1. The Monetary Policy of Namdian Is Determined by the Namdian

question 343

Multiple Choice

Scenario 21-1.
The monetary policy of Namdian is determined by the Namdian Central Bank.The local currency is the dia.Namdian banks collectively hold 100 million dias of required reserves,25 million dias of excess reserves,250 million dias of Namdian Treasury Bonds,and their customers hold 1,000 million dias of deposits.Namdians prefer to use only demand deposits and so the money supply consists of demand deposits.
-Refer to Scenario 21-1.Suppose the Central Bank of Namdia loaned the banks of Namdia 5 million dias.Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same.By how much would the money supply of Namdia change?

• A) 60 million dias
• B) 50 million dias
• C) 40 million dias
• D) None of the above is correct.

---

Definitions:

Automobile Manufacturers

Companies engaged in designing, developing, manufacturing, marketing, and selling motor vehicles.

Biomass Plantation

A land area dedicated to growing plants that are to be used for the production of bioenergy or biofuels.

Douglas Fir

A type of evergreen conifer species, notable for its significant role in the timber industry and its habitat, primarily in North America.

Poplar

A type of fast-growing tree found in temperate regions, known for its soft wood used in various applications.