If Reserves in the Banking System Increase by $100, Then

question 1

Multiple Choice

If reserves in the banking system increase by $100, then chequable deposits will increase by $667 in the simple model of deposit creation when the desired reserve ratio is ________.

• A) 0.01
• B) 0.05
• C) 0.15
• D) 0.20

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Definitions:

Critical Thinkers

Individuals who actively and skillfully conceptualize, apply, analyze, synthesize, and evaluate information to reach a conclusion.

Reasonable People

Individuals who exercise average care, skill, and judgment in conduct and who are presumed to have a certain level of knowledge when making decisions.

Ethical Dimension

Pertains to the moral aspects or implications of a situation, decision, or action.

Swindle

A deceptive act or operation designed to cheat or defraud someone.