Refer to the Information Provided in Scenario 25

question 118

Multiple Choice

Refer to the information provided in Scenario 25.1 below to answer the question(s) that follow.
SCENARIO 25.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.
-Refer to Scenario 25.1. Based on the initial $100,000 deposit, the money supply will, at most, expand to

• A) $1 million.
• B) $2 million.
• C) $16.67 million.
• D) $50 million.

Comprehend the law of demand and the factors that cause shifts in demand curves.

Analyze how changes in consumer income affect the demand for various types of goods.

Distinguish between the concepts of income effect and substitution effect.

Understand the supply curve and its relationship with price and quantity supplied.

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Definitions:

Probability Calculus

A branch of mathematics that deals with calculating the likelihood of different possible outcomes.

Negation

The logical operation that takes a proposition to its opposite in truth value, from true to false and vice versa.

Event

An occurrence or happening, particularly one of significance, that can be distinctly identified in time and space.

Probability

The quantification of the chances that a specific event will take place.