If the desired revenue ratio doubles, then the deposit multiplier _______.

halves
changes only if there is a change in deposits
changes only if there is a change in reserves
doubles

Banks in the land of Nod have total deposits of £3 million, an actual reserve ratio of 10 percent, and loans to households and firms of £2 million. They have no net worth. Total assets of the banks are __________ and total reserves are __________.

£3 million; £300,000
£1 million; £2 million
£300,000; £300,000
£2 million; £1 million

The banks on Sunny Island have chequing deposits of $3 million , reserves of £600,000, loans of £2.4 million. These banks have no net worth and hold no excess reserves. The desired reserve ratio is ____________ and the deposit multiplier is ___________.

0.20; 5.0
0.25; 4.0
4.00; 2.5
5.00; 0.2

You've decided to immigrate to Banana Isle. You take your total life savings of £500 and deposit the £500 into a bank on Banana Isle. The desired reserve ratio of the banks is 20 percent. After the bank system has made 3 rounds of loans, it has created __________ of new money and its required reserves have increased by _____________.

£976; £244
£1,476; £244
£500 plus interest; £100
£1,220; £244

You've decided to immigrate to Banana Isle. You take your total life savings of £500 and deposit the £500 into the only bank on Banana Isle. The bank's desired reserve ratio is 20 percent. When the bank in Banana Isle has reduced its excess reserves to zero, the quantity of loans made by the bank is ______________.

£2,000
£625
£2,500
£500

If the quantity of money in an economy is £6 billion, the velocity of circulation is 2, and the price level is 120, then _______.

real GDP is £10 billion
GDP is £3.6 billion
real GDP is £12 billion
GDP is £10 billion

The figure shows the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for the country of Slag. The economy is currently at point a. The quantity of money in Slag increases. Slag moves to point _______ in the short run and to point _______ in the long run.

b; c
b; a
d; a
d; c

If the money supply increases when the economy is at full employment, aggregate demand ____________. In the short run, ____________ but in the long run, real GDP will _____________.

increases; the price level rises; return to potential GDP
decreases; real GDP decreases; increase to potential GDP
decreases; the price level falls; return to potential GDP
increases; real GDP increases; increase further

The economy is at an above full-employment equilibrium. _____________in the quantity of money will _______________ aggregate demand and prevent the price level from rising.

A decrease; decrease
An increase; decrease
An increase; increase
A decrease; increase

The quantity theory of money predicts that in the long run the inflation rate _______.

equals the money growth rate minus the growth rate of potential GDP
equals 1 minus the money growth rate
equals the money growth rate plus the growth rate of potential GDP
is zero