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:

Budget Constraint

The limitation on the purchase of goods and services based on the availability of income and wealth, reflecting the trade-off between different combinations of goods.

Bell Peppers

A type of large, sweet red, green, or yellow vegetable, also known as a capsicum, commonly used in cooking for its flavor.

Black Beans

A type of legume that is often used in Latin American and Caribbean cuisine, known for its black color, small size, and rich, slightly sweet flavor.