The monetary base will increase if ______________.

the Bank of England decreases its holding of government securities
banks increase their deposits at the Bank of England
the Bank of England increases its holding of government securities
the Bank of England increases the discount rate

Following an open market operation, the Bank of England's assets increase by £5 million and its liabilities increase by £5 million. These changes are indicative of an open market ______________.

sale to either a commercial bank or the public
sale to a commercial bank but not to the public
purchase from the government
purchase from either a commercial bank or the public

The Bank sells £50 million of government securities to Barclays. The Bank's assets will _______ and the Bank's liabilities will _______. Barclays' assets will _______ and Barclays' liabilities will _______.

decrease by £50 million; not change; increase by £50 million; not change
not change; not change; increase by £50 million; decrease by £50 million
increase by £50 million; decrease by £50 million; not change; not change
decrease by £50 million; decrease by £50 million; not change; not change

If an increase in the monetary base of £8 billion increases the quantity of money by £64 billion, then the money multiplier is equal to ________.

£64 billion
£8 billion
1/8
8

_______ in the currency drain _______ the money multiplier.

A decrease; decreases
An increase; increases
A decrease; does not change
An increase; decreases

Suppose that the Bank conducts an open market operation that results in the commercial banks having excess reserves of £100,000. If the currency drain is 20 percent and the required reserve ratio is 10 percent, then at the end of the first round, total deposits will be _______ and at the end of the second round total deposits will _______.

£20,000; £34,400
£80,000; £57,600
£80,000; £137,600
£100,000; £190,000

If the Bank fears inflation it will undertake an open market _______ of securities, the money supply will _____________ and interest rates will _________.

purchase; increase; fall
purchase; decrease; rise
sale; decrease; rise
sale; increase; fall

When the Bank sells securities in the open market, the pound sterling _______ on the foreign exchange market and _______.

falls; aggregate demand decreases
rises; aggregate demand increases
rises; aggregate demand decreases
falls; the increase in imports is greater than the increase in exports

In the land of Oz the monetary unit is the emerald. Households and firms in Oz currently hold 100,000 emeralds. The price level is 100. If the price level jumps to 110 and other things remain the same, households and firms will ____________.

increase the money they hold by 1,000 emeralds
decrease the money they hold by 10,000 emeralds
increase the money they hold by 10,000 emeralds
decrease the money they hold by 1,000 emeralds

If people are holding more money than they would willingly hold, they will _______ bonds. The price of a bond will _______ and the interest rate will _______.

sell; rise; fall
sell; fall; rise
purchase; rise; fall
purchase; fall; rise