Scenario 21-2. The Monetary Policy of Tazi Is Controlled by the Country's

question 286

Multiple Choice

Scenario 21-2.
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi.The local unit of currency is the taz.Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves,75 million tazes of excess reserves,have issued 7,500 million tazes of deposits,and hold 225 million tazes of Tazian Treasury bonds.Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 21-2.Suppose the Bank of Tazi purchased 50 million tazes of Tazian Treasury Bonds from the banks.Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same.By how much does the money supply change?

• A) 625 million tazes
• B) 1,000 million tazes
• C) 1,250 million tazes
• D) None of the above is correct.

---

Definitions:

Tied Good

A product or service that is sold or used together with another product or service, often where one cannot effectively be used without the other.

Profit-maximizing Price

The price at which a company can sell its product to achieve the highest possible profit.

Salads and Steaks

A metaphor representing a range of consumer choices in the market, emphasizing the diversity in preference and consumption.

Tying Strategy

A business practice where a seller requires the buyer to purchase another one of its products as a condition for buying a desired product, often scrutinized for anti-competitive behavior.