QUESTION 17 2 points Save Answer Tony deposits $2,000 in cash at the Last Nation

Question

QUESTION 17 2 points Save Answer Tony deposits $2,000 in cash at the Last National Bank and the bank credits Tony's checking account in the amount of $2,000. Which of the following is true immediately after this transaction, before Last National Bank has a chance to expand or contract its lending? O A The money supply increases by 52.000 times the money multiplier OB. Both the assets and the liabilities of the Last National Bank fall by $2,000 O COnly the composition of the money supply changes, not its amount. O D. The money supply increases by S2.000. QUESTION 18 2 points Save Answer If a bank borrows $1,000 from the Fed and lends it out, the bank sets in motion a process that will result in an expansion of the money supply by a multiple of that $1,000 O A.True OB False QUESTION 19 2 points Save Answer If the reserve requirement is 10% and the Fed sells $5,000 of Treasury Securities to a bank, it sets in motion a chain reaction that can ultimately result in at most Oa $50,000 increase in the money supply. a $5,000 decrease in the money supply. a $5,000 increase in the money supply a $50,000 decrease in the money supply QUESTION 20 2 points Save Answer The money expansion process that results from a change in the reserves of the banking system, or a change in the reserve requirement can continue until banks' liabilities equal their assets OB. required reserves equal zero .excess reserves equal zero. demand deposits equal zero

Explanation / Answer

Q17) C only the composition of the money supply changes, not its amount. because $2000 is already in circulation.

Q18) True when a bank borrows money from fed that means new currency come into circulation and money supply increases.

Q19) $50000 decreases in the money supply, 1/0.1 * 5000

Q20) money supply can increase until excess reserve equal zero.

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