Use the Following to Answer Questions

question 57

Multiple Choice

Use the following to answer questions .
Exhibit: Reserves, Loans, and Money

-(Exhibit: Reserves, Loans, and Money) . The required reserve ratio is 10%. What is the maximum amount of new loans that Bolton bank can create and by how much can Bolton initially increase the money supply, assuming that newly created deposits are transferred to another bank?

• A) $30 million; $30 million
• B) $70 million; $30 million
• C) $70 million; $70 million
• D) $70 million; $700 million

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Definitions:

Primary Sector

The sector of an economy focused on the extraction and collection of natural resources, such as agriculture, mining, and forestry.

Secondary Sector

The portion of the economy that includes industries involved in the processing, transforming, and manufacturing of goods from raw materials.

Tertiary Sector

The segment of the economy that provides services to consumers, including retail, health care, and education.

Charlie Chaplin

An iconic British film actor and filmmaker, known for his contributions to the silent film era and his character "The Tramp."