If the Monetary Base Fell and the Currency-Deposit Ratio Rose

question 65

Multiple Choice

If the monetary base fell and the currency-deposit ratio rose but the reserve-deposit ratio remained the same, then:

• A) the money supply would fall, but not by as much as it would have fallen if the reserve-deposit ratio had risen.
• B) the money supply would fall, but not by as much as it would have fallen if the reserve-deposit ratio had fallen.
• C) the money supply would fall more than it would have fallen if the reserve-deposit ratio had risen.
• D) it is impossible to be certain whether the money supply would fall or rise in this case.

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Definitions:

Tax Laws

Regulations imposed by governmental agencies in relation to the calculation and payment of taxes by individuals and organizations.

Deferred Tax Liability

A tax obligation that arises when there are temporary differences between the book value and the tax value of assets and liabilities.

Deferred Tax Asset

A Deferred Tax Asset arises when a company pays more tax to the government than it owes in its financial statements, which can be used to reduce tax liability in future periods.

Adjusted

Refers to the modification of financial statements to provide a more accurate picture by removing the effects of non-recurring transactions or events.