In the Simple Deposit Expansion Model,if the Banking System Has

question 173

Multiple Choice

In the simple deposit expansion model,if the banking system has excess reserves of $75,and the required reserve ratio is 20%,the potential expansion of checkable deposits is

• A)$75.
• B)$750.
• C)$37.50.
• D)$375.

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Definitions:

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved in a market.

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change in response to price changes.

Deadweight Loss

An economic inefficiency that occurs when the total welfare in a market is not maximized, resulting from distortions such as taxes, subsidies, or monopolies.

Excise Tax

A tax imposed on specific goods, services, or activities, often included in the price of products like tobacco, alcohol, and fuel, designed to discourage their use or generate revenue.