As the required reserve ratio is decreased the money multiplier ?

Related Mcqs:

1. As the required reserve ratio is decreased the money multiplier ?

   A. decreases
   B. remain the same, as long as banks hold no excess reserves
   C. could either increase or decrease
   D. increases

2. Bance Solida has, in the past, always operated with a reserve ratio of 25 percent. It has now been taken over by Gung-Ho Bank Which operates with a reserve ration of 12½ percent, Assuming that Banca Solida adopts the business practices of its new owner, What will be the effect on money supply in the country in which Banca Solida operates ?

   A. Money supply will increase because Banca Solida will increase its loans
   B. The effect on money supply cannot be determined from the information given
   C. Money supply will decrease because the loans will have to be repaid
   D. Money supply will be unchanged because the central bank has made no policy changes

3. If the banks in an economy operate with a reserve ratio of 20 percent then the money multiplier is ?

   A. 4
   B. 20
   C. 25
   D. 5

4. A bank has excess reserves to lend but is unable to find anyone to borrow the money This will _________ the size of the money multiplier?

   A. reduce
   B. have no effect on
   C. increase
   D. double

5. Reserve requirements that may be imposed on an economy’s banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of them ?

   A. assets
   B. deposits
   C. loans
   D. government bonds

6. Suppose Imtiaz moves his Rs1,000 demand deposit from Bank A to Bank B. If both banks operate with a reserve ratio of 10 percent What is the potential change in money supply as a result of Gerard’s action ?

   A. Rs 10,00
   B. Rs 1,000
   C. Rs 9,000
   D. Rs 0

7. Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent ?

   A. Rs 4,000
   B. Rs 5,000
   C. Rs 1,000
   D. Rs 0

8. Money that a government has required has required to be accepted in settlement of debts is ?

   A. barter money
   B. currency value
   C. legal tender
   D. commodity money

9. If banks and the private sector decide to hold less cash the money multiplier will be ?

   A. Unchanged
   B. Larger
   C. Smaller
   D. Unstable

10. Suppose all banks maintain a 100 percent reserve ratio. If an individual deposits Rs 1,000 of currency in a bank ?

    A. the money supply increases by more than Rs 1,000
    B. the money supply increase by less than Rs 1,000
    C. the money supply decrease by less than Rs 1,000
    D. the money supply decrease by more than Rs 1,000
    E. The money supply is unaffected