If Reserves in the Banking System Increase by $100,then Checkable

question 63

Multiple Choice

If reserves in the banking system increase by $100,then checkable deposits will increase by $400 in the simple model of deposit creation when the required reserve ratio is

• A)0.01.
• B)0.10.
• C)0.20.
• D)0.25.

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Definitions:

Unlimited Liability

A legal structure in which the owners of a business are personally liable for all the business's debts, with no limit on the amount for which they can be liable.

Mutual Agency

A principle of partnership where each partner has the authority to bind the partnership in contract with third parties.

Governmental Regulations

Laws and rules established by governments to control or influence business practices and operations.

Corporate Form

A form of business organization that is recognized as a separate legal entity from its owners, providing limited liability and allowing ownership to be easily transferred.