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.

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Definitions:

Exocrine Role

Refers to the function of exocrine glands in secreting substances through ducts to an external or internal surface.

Pancreas

A glandular organ in the digestive and endocrine system of vertebrates producing digestive enzymes and hormones like insulin.

Pheromones

Chemical substances produced and released into the environment by an animal, affecting the behavior or physiology of others of its own species.

Chemical Signals

Molecules released by cells that are used to communicate with other cells, affecting their behavior or physiology.