Initially, the nominal interest rate is 8 percent and the expected rate of inflation is 6 percent. One year later, the nominal interest rate rises to 12 percent and inflation rate to 10 percent. Based on this information the interest rate:（）

单项选择题The potential deposit expansion multiplier equals: （）

A. the required reserve ratio.
B. the inverse of the required reserve ratio.
C. the required reserve ratio multiplied by the quantity of reserves.

单项选择题The combination of currency in circulation, banks' reserve deposits at the central bank, and coins issued by the Treasury is referred to as the:（）

A. M1 money supply.
B. liquid money supply.
C. monetary base.