If the Required Reserve Ratio Is 5 Percent and the Federal

question 146

Multiple Choice

If the required reserve ratio is 5 percent and the Federal Reserve sells $10,000 worth of bonds,the money supply can potentially

• A)Decrease by $200,000.
• B)Decrease by $50,000.
• C)Decrease by $500.
• D)Increase by $50,000.

---

Definitions:

Statute of Frauds

A law that requires certain types of contracts to be in writing and signed to be legally enforceable.

Enforceability

The characteristic of a legal agreement or obligation that makes it legally binding and capable of being upheld or imposed in a court of law.

Reliance

The act of depending or trusting in something or someone, often involves confidence placed in a party during contractual agreements.

Specific Performance

A legal remedy in contract law requiring a party to execute the contract according to its exact terms rather than paying monetary damages.