Suppose a country's reserve-deposit ratio (rr) increases and its monetary base (B) remains constant.Briefly answer the following questions.a. What is the impact on the money multiplier (m)? (1 mark)b. What is the impact on the money supply (M)? (1 mark)c. Suggest one policy the country's central bank can implement to counter the impact of the reserve-deposit ratio change on money supply. The suggested policy must change the country's monetary base (B). (1 mark)

Which statement is true?This is a multi answer question. You can select one or more options as the answer.A.Money multiplier(m) can be equal to 1.B.Money supply (M) will decrease as Currency-deposit ratio (cr) increases.C.Money supply (M) will increase as Reserve-deposit ratio (rr) increases.D.Reserve-deposit ratio (rr) depends on households’ preferences.

Assuming initially that the required reserve ratio = 10%, the currency-deposit ratio = 75%,and the excess reserve ratio = 156%, an increase in the currency-deposit ratio to 150% causesthe M1 money multiplier to ________, everything else held constant.A) increase from 0.73 to 0.78B) decrease from 0.73 to 0.61C) increase from 1.54 to 1.67D) decrease from 1.67 to 1.54

In the fictional country of Econland, the central bank reports certain monetary statistics for two consecutive years. In Year 1, the monetary base is $10 billion, the currency-deposit ratio is 0.3, and the reserve-deposit ratio is 0.2. In Year 2, the monetary base increases to $12 billion, and the currency-deposit ratio rises to 0.4, while the reserve-deposit ratio remains unchanged. Given this information, which of the following statements are true? (Select all that apply.)This is a multi answer question. You can select one or more options as the answer.A.The amount of currency in Year 1 is $3 billion.B.The money supply in Year 1 is greater than $40 billion.C.The increase in the monetary base from Year 1 to Year 2 is 20%.D.The money supply in Year 2, given the changes in the monetary base and currency-deposit ratio, is less than $30 billion.E.The reserve amount in Year 2 is greater than $2.4 billion.

What happens when the currency-deposit ratio rises?This is a multi answer question. You can select one or more options as the answer.A.Money multiplier (radio of Money supply and the monetary base) rises.B.Money multiplier (radio of Money supply and the monetary base) declines.C.Money supply rises.D.Money supply declines.

Suppose that the required reserve ratio is 12%, excess reserve is $300 billion, excess reserve ratio is 0.2 and currency in circulation is $1200 billion. (a) (6 marks) Calculate the money supply, and the money multiplier. (b) (6 marks) Suppose the Central Bank acts as a lender of last resort and lends $2000 billion to two failing commercial banks. However, instead of lending out the money and keeping the ratios constant, the commercial banks instead kept the extra borrowings from the Central Bank as excess reserve instead. Assume that currency and deposits remain the same (while excess reserve and excess reserve ratio change), calculate the new monetary base, money supply, and money multiplier.