Table 142 Monetary Aggregates of the U Assume an Original Balance Sheet: If the Fed Changes the Item

question 131

Multiple Choice

Table 14.2 Monetary Aggregates of the U.S.Financial System
$\begin{array}{|l|r|}\hline\text { Item } & \text { Amount } \\\hline \text { Cash held by public } & \text { \$100billion } \\\hline\text { Transactions deposits } & \text { \$300billion } \\\hline\text { Required reserves } & \text { \$30billion } \\\hline\text { Excess reserves } & \text { \$0billion } \\\hline \text { U.S. bonds held by public } & \$ 475 \text { billion }\\\hline \end{array}$

Assume an original balance sheet: If the Fed changes the required reserve ratio in Table 14.2 to 15 percent,the lending capacity of the system will eventually

• A)Increase by $100 billion.
• B)Increase by $15 billion.
• C)Decrease by $100 billion.
• D)Decrease by $1.5 billion.

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, carried over from the end of the previous period.

Cost Of Goods Sold

The total cost directly associated with producing or acquiring the goods sold by a company during a specific period.

Ending Inventory

The worth of merchandise available for purchase at the conclusion of a financial period.