If the Desired Reserve Ratio Is Ten Percent, Currency in Circulation

question 145

Multiple Choice

If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $1000 billion, and excess reserves total $1 billion, then the money supply is ________.

• A) $10000 billion
• B) $4000 billion
• C) $1400 billion
• D) $10400 billion

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Definitions:

Current Dollars

A term referring to the value of money not adjusted for inflation, representing the nominal value of economic transactions based on current prices.

GDP

Gross Domestic Product, a measure of the economic performance of a country, calculated as the total value of all goods and services produced.

Real GDP

Gross Domestic Product adjusted for inflation, which represents the value of all goods and services produced within a country's borders in a given period, measured in constant prices.

GDP

Gross Domestic Product, the total value of all goods and services produced by a country over a specific time period.