The Banking System Is Able to Make New Loans Equal

question 129

Multiple Choice

The banking system is able to make new loans equal to

• A) total legal reserves of the system.
• B) total excess reserves of the system.
• C) total required reserves of the system.
• D) a multiple of total excess reserves of the system.

---

Definitions:

Excise Tax

A tax levied on specific goods, services, or activities, such as tobacco, alcohol, and gasoline, usually to discourage use or generate revenue.

Consumers

Individuals or entities that purchase goods and services for personal use.

Soda

A carbonated soft drink, often flavored and sweetened.

Laffer Curve

A representation of the relationship between tax rates and the amount of tax revenue collected by governments, suggesting an optimal tax rate that maximizes revenue without deterring economic activity.