Scenario 11-1. The Monetary Policy of Namdian Is Determined by the Namdian

question 18

Multiple Choice

Scenario 11-1.
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 11-1 . Suppose the Central Bank of Namdia purchases 25 million dias of Namdian Treasury Bonds from banks. 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) 200 million dias
• B) 150 million dias
• C) 100 million dias
• D) None of the above is correct.

Understand the concept of outsourcing and make-or-buy decisions.

Analyze special orders and determine their financial implications.

Evaluate the use of constrained resources to maximize profitability.

Apply costing methods to real-life business scenarios.

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Definitions:

Importance

The state or fact of being of great significance or value.

Implicit Premise

A premise that is assumed by an argument but is not stated.

Plane Ticket

A document, issued by an airline or a travel agency, to confirm an individual's entitlement to a seat on a flight on an aircraft.

Bus

A large motor vehicle designed to carry passengers along designated routes.