Question at position 8 If the required reserve ratio is 10%, currency in circulation is $300 billion, checkable deposits are $900 billion, and excess reserves total $1 billion, then the money supply is ________ billion. $2700$1200$1800$3000$3100单项选择题
A
$2700
B
$1200
C
$1800
D
$3000
E
$3100

Question

Question at position 8 If the required reserve ratio is 10%, currency in circulation is $300 billion, checkable deposits are $900 billion, and excess reserves total $1 billion, then the money supply is ________ billion. $2700$1200$1800$3000$3100单项选择题

A

$2700

B

$1200

C

$1800

D

$3000

E

$3100

BlackTom AI · Accepted Answer

Money supply (M1) equals currency in circulation plus checkable (demand) deposits. Required reserves and excess reserves affect banks’ ability to create additional deposits via lending, but they do not change the current measured money supply unless new lending/deposit creation has already occurred.

1) Relevant concepts:
- M1 (money supply) = currency in circulation + checkable deposits.
- Required reserve ratio determines how much of deposits banks must hold and thus limits future deposit creation (money multiplier), but required reserves and excess reserves are parts of bank balance sheets and the monetary base, not direct additions to current M1.

2) Step-by-step reasoning:
- Given currency in circulation C = $300 billion.
- Given checkable deposits D = $900 billion.
- Current money supply M1 = C + D.

3) Calculation (showing intermediate step):
- M1 = 300 + 900
- M1 = 1200 (billion dollars)

4) Why this is correct:
- The formula directly sums the two components that constitute M1. The required reserve ratio (10%) and excess reserves ($1 billion) only describe banking constraints and potential for future deposit creation; they don’t add to the present counted M1 unless new loans create new deposits.

5) Why other options are incorrect (briefly):
- $2700, $1800, $3000, $3100: none equal the sum of currency plus checkable deposits (300 + 900 = 1200). Some of these numbers could arise if one mistakenly applied a money multiplier to excess reserves or tried to add reserves to M1, but that misapplies the definitions — reserves are not directly part of M1 in this context.

6) Conclusion:
- The correct money supply is $1200 billion, which matches the provided answer $1200.

Question at position 8 If the required reserve ratio is 10%, currency in circulation is $300 billion, checkable deposits are $900 billion, and excess reserves total $1 billion, then the money supply is ________ billion. $2700$1200$1800$3000$3100单项选择题

类似问题

Question at position 19 The money supply is related to expected deposit outflows, and is related to the market interest rate.positively; negatively negatively; negativelynegatively; positivelypositively; positively

Question at position 9 Decisions by about their holdings of currency and by about their holdings of excess reserves affect the money supply. banks; depositors depositors; borrowers depositors; banksborrowers; depositors

Question at position 11 The money supply is related to expected deposit outflows, and is related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively

Question at position 8 Decisions by about their holdings of currency and by about their holdings of excess reserves affect the money supply. borrowers; depositorsdepositors; borrowers banks; depositors depositors; banks

If you withdraw $100 from your checking account and use the money to purchase a 14-month CD (certificate of deposit), M1 [ Select ] and M2 [ Select ]

If you withdraw $100 from your checking account and use the money to purchase a 14-month CD (certificate of deposit), M1 falls. and M2 remains unchanged.

If you withdraw $100 from your checking account and use the money to purchase a 14-month CD (certificate of deposit), M1 [ Select ] rises. remains unchanged. falls. and M2 [ Select ] rises. remains unchanged. falls

In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases.

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Question at position 8 If the required reserve ratio is 10%, currency in circulation is $300 billion, checkable deposits are $900 billion, and excess reserves total $1 billion, then the money supply is ________ billion. $2700$1200$1800$3000$3100单项选择题

类似问题

Question at position 19 The money supply is ________ related to expected deposit outflows, and is ________ related to the market interest rate.positively; negatively negatively; negativelynegatively; positivelypositively; positively

Question at position 9 Decisions by ________ about their holdings of currency and by ________ about their holdings of excess reserves affect the money supply. banks; depositors depositors; borrowers depositors; banksborrowers; depositors

Question at position 11 The money supply is ________ related to expected deposit outflows, and is ________ related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively

Question at position 8 Decisions by ________ about their holdings of currency and by ________ about their holdings of excess reserves affect the money supply. borrowers; depositorsdepositors; borrowers banks; depositors depositors; banks

If you withdraw $100 from your checking account and use the money to purchase a 14-month CD (certificate of deposit), M1 [ Select ] and M2 [ Select ]

If you withdraw $100 from your checking account and use the money to purchase a 14-month CD (certificate of deposit), M1 falls. and M2 remains unchanged.

If you withdraw $100 from your checking account and use the money to purchase a 14-month CD (certificate of deposit), M1 [ Select ] rises. remains unchanged. falls. and M2 [ Select ] rises. remains unchanged. falls

In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases.

更多留学生实用工具

希望你的学习变得更简单

Question at position 19 The money supply is related to expected deposit outflows, and is related to the market interest rate.positively; negatively negatively; negativelynegatively; positivelypositively; positively

Question at position 9 Decisions by about their holdings of currency and by about their holdings of excess reserves affect the money supply. banks; depositors depositors; borrowers depositors; banksborrowers; depositors

Question at position 11 The money supply is related to expected deposit outflows, and is related to the market interest rate.negatively; negativelypositively; positivelypositively; negatively negatively; positively

Question at position 8 Decisions by about their holdings of currency and by about their holdings of excess reserves affect the money supply. borrowers; depositorsdepositors; borrowers banks; depositors depositors; banks