If the Banking System Has Demand Deposits of $100,000,total Reserves

question 133

Multiple Choice

If the banking system has demand deposits of $100,000,total reserves equal to $20,000,and a required reserve ratio of 20 percent,the banking system can increase the volume of loans by

• A)$0.
• B)$20,000.
• C)$80,000.
• D)$100,000.

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Definitions:

Total Cost

The complete amount of money required for the production of a given level of output, including both fixed and variable costs.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the profits that exceed normal expected profits.

Marginal Revenue

The surplus earnings generated by the sale of one extra unit of a product or service.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.