Assume That the Required Reserve Ratio Is 10

question 9

Multiple Choice

Assume that the required reserve ratio is 10%. An increase of $1,000 in the banking system's excess reserves may result in a total expansion of new deposits for the banking system as a whole by as much as

• A) $1,000.
• B) $9,000.
• C) $10,000.
• D) $100,000.

---

Definitions:

Thimble

A small metal or plastic cap with a grooved edge used to protect the finger while pushing a needle through fabric in sewing; or, a fitting used in rope systems to protect the loop from wear.

Torquing

The process of applying a specific amount of twist or force to fasteners, such as bolts and nuts, to ensure they are properly secured.

Clamping Force

The force applied to hold two or more objects together, preventing movement or separation.

Yield Point

The stress at which a material begins to deform plastically, after which deformation will occur without any increase in load.