Ooredoo oo... drive.google.com 20. The money supply will grow faster through dep
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Ooredoo oo... drive.google.com 20. The money supply will grow faster through deposit creation when A) People suddenly want to use cash instead of checks to make transactions B) Consumers, businesses, and government suddenly have greater boowing needs C) Banks suddenly views loans as too risky and therefore buy govermment secunities instead D) All of the above 21. When the central bank changes the required reserve ratio, which of the following will change for an individual bank? A) Transactions-account balances and lending capacity B) C) Available reserves, required reserves, and excess reserves D) Required reserves, excess reserves, and lending capacity t balances, available reserves, and excess reserves 22 lfbank customers d cided as a group to pay ofther loans and not take out any new kuns. everything else constant C) The money supply would not change A) Excess reserves would decrease B) The money multiplier would decrease. D) The money supply would decrease For qeestioms 8-11, consider the following table about the whole banking system in Oman Cash beld 150 mallion Government bond held by public and banks 200 mallion 23. On the basis of the information above, the required reserve ratio is: A) 6.3 percent B) 10.0 percent C) 15.0 percent. D) 20.0 percent 24. If the central bank changes the required reserve ratio to 10 percent, everything else coeslant, the lending capacity of the banking sysiem weuld eventually (finally) C) Increase by $0 mallion D) Increase by 500 million A) Decrease by 50 mallion B) Decrease by 500 million A) 1,250 million B) 1,400 million. C)1,150 million D) 2250 maillion A) 1,150 million. B) 150 million C) 250 million D) 400 millson 25. The moncy supply (MI) in the economy using the above table is: 26. The level of total reserves in the hanking system is 27. When money serves only as a mechanism for transforming current income into future purchases it is A) Medium of exchange B) Store of value. C) Unit of account D) None of the above 28 MI A) Includes the most liquid forms of moncy B) Is the marrowest definition of the moncy supply C) Largely consists of chocking-account balances D) All of the aboveExplanation / Answer
Q20 Ans B)
Consumers , businesses & government suddenly have greater borrowing needs.
Q 21 Ans D)
Required reserve, Excess Reserve and Lending Capacity.
Q 22 Ans D)
The money supply would decrease.
Q 23 Ans C)
Reqruired Reseve = RR Ratio* Transactional Deposits = RR *1000 mn
150 = RR*1000 therfore RR =15%
Q 24 Ans C)
If Reserve Ratio changes to 10% then REquired reserve will come down to 10% hence will reduce to 100 mn
Therfore Lending capacity of bank will be increased by $50 mn
Q 28 Ans D)
M1 includes most liquid form of money, narrowest definition of money supply & largely consists of checking account balances
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