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In Macroland,currency Held by the Public Is 2000 Econs,bank Reserves

Question 3

Multiple Choice

In Macroland,currency held by the public is 2000 econs,bank reserves are 600 econs,and the desired reserve-deposit ratio is 15%.If the central bank sells government bonds to the public in exchange for 300 econs that are then destroyed,the money supply in Macroland will decrease from ________ econs to ________ econs,assuming that the public does not wish to change the amount of currency it holds.


A) 2,000;1,700
B) 2,600;2,300
C) 2,990;2,645
D) 6,000;4,000
E) 7,000;6,000

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