61.The preferences of households determine the: A)reserve–deposit ratio. B)currency–deposit ratio. C)size of the monetary base. D)loan–deposit ratio.
61.The preferences of households determine the:
A)reserve–deposit ratio.
B)currency–deposit ratio.
C)size of the monetary base.
D)loan–deposit ratio.
62.If the monetary base is denoted by B, rr is the ratio of reserves to deposits, and cr is the ratio of currency to deposits, then the money supply is equal to ______ divided by ______ multiplied by B.
A)(rr + 1); (rr + cr)
B)(cr + 1); (cr + rr)
C)(rr + cr); (rr + 1)
D)(rr + cr); (cr + 1)
63.The ratio of the money supply to the monetary base is called:
A)the currency–deposit ratio.
B)the reserve–deposit ratio.
C)high-powered money.
D)the money multiplier.
64.High-powered money is another name for:
A)currency.
B)demand deposits.
C)the monetary base.
D)M2.
65.If the ratio of reserves to deposits (rr) increases, while the ratio of currency to deposits (cr) is constant and the monetary base (B) is constant, then:
A)it cannot be determined whether the money supply increases or decreases.
B)the money supply increases.
C)the money supply decreases.
D)the money supply does not change.
66.If the ratio of currency to deposits (cr) increases, while the ratio of reserves to deposits (rr) is constant and the monetary base (B) is constant, then:
A)it cannot be determined whether the money supply increases or decreases.
B)the money supply increases.
C)the money supply decreases.
D)the money supply does not change.
67.The money supply will increase if the:
A)currency–deposit ratio increases.
B)reserve–deposit ratio increases.
C)monetary base increases.
D)discount rate increases.
68.The money supply will decrease if the:
A)monetary base increases.
B)currency–deposit ratio increases.
C)discount rate decreases.
D)reserve–deposit ratio decreases.
69.If the reserve–deposit ratio is less than one, and the monetary base increases by $1 million, then the money supply will:
A)increase by $1 million.
B)decrease by $1 million.
C)increase by more than $1 million.
D)decrease by more than $1 million.
70.If the currency–deposit ratio equals 0.5 and the reserve–deposit ratio equals 0.1, then the money multiplier equals:
A)0.6.
B)1.67.
C)2.0.
D)2.5.
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