Joe deposits $200 in currency into his checking account at a bank. This deposit is treated as
A. an addition of $200 to the money supply because the bank holds $200 in currency and the checking account has been increased by $200.
B. an addition of $200 to the money supply because of the creation of a checkable deposit of $200.
C. a subtraction of $200 from the money supply because the $200 in currency is no longer in circulation.
D. no change in the money supply because the $200 in currency has been converted to a $200 increase in checkable deposits.
Answer: D
You might also like to view...
The example of the VCRs from Korea illustrates dumping due to
A) retaliatory trade practices. B) predatory pricing. C) avoidance of environmental laws. D) price discrimination.
For an inferior good, the income effect
a. is zero b. at least partially offsets the substitution effect c. operates to increase the quantity demanded d. helps explain why the demand curve slopes upward e. does not exist
What happens to the Canadian M2 money supply if there is an excess demand of 100 million euros in the foreign exchange market and the central bank intervenes to offset the excess? Assume the M2 money multiplier is 3
a. The Canadian M2 money supply falls by 300 million euros worth of Canadian dollars. b. The Canadian M2 money supply rises by 300 million euros worth of Canadian dollars. c. The Canadian M2 money supply might fall or rise. d. The Canadian M2 money supply rises by 100 million euros worth of Canadian dollars. e. The Canadian M2 money supply falls by 100 million euros worth of Canadian dollars.
The quantity of reserves demanded decreases as the federal funds rate rises because
A. people want more liquid assets as the federal funds rate rises. B. the price of bonds rise as the federal funds rate rises. C. the opportunity cost of holding excess reserves increases as the federal funds rate rises. D. people want more money to invest as the federal funds rate rises.