You Are Given the Following Information About the Economy of Nocoin

Multiple Choice

You are given the following information about the economy of Nocoin: The banks have deposits of $300 billion.Their reserves are $15 billion, two thirds of which is in deposits with the bank.Households and firms hold $30 billion in bank notes.There are no coins!
The banks have no excess reserves.
The Bank of Nocoin, the central bank, increases bank reserves by $0.5 billion.The quantity of money _______.
The change in the quantity of money is not equal to the change in the monetary base because _______.
The money multiplier is _______.

A) increases; the monetary base includes bank deposits; 7.0
B) increases; when bank reserves increase, banks loan out their excess reserves and a multiplier process ensues; 7.33
C) decreases; an increase in monetary base brings about a decrease in the quantity of money; 7.33
D) decreases; money includes currency, but the monetary base does not include currency; 7.0
E) increases; the components of the monetary base are not the components of the quantity of money; 7.0