If the Reserve Ratio Is 10%, and Banks Do Not

question 223

Multiple Choice

If the reserve ratio is 10%, and banks do not hold excess reserves, when the Fed purchases $10 million of government bonds, bank reserves

• A) increase by $10 million and the money supply could eventually increase by $10 million.
• B) decrease by $10 million and the money supply could eventually decrease by $100 million.
• C) increase by $10 million and the money supply could eventually increase by $100 million.
• D) decrease by $10 million and the money supply could eventually decrease by $10 million

---

Definitions:

Bulimia

An eating disorder marked by binge eating followed by methods to avoid weight gain, such as vomiting or excessive exercise.

Binge Eating Disorder

An eating disorder marked by recurrent episodes of eating large quantities of food in a short period of time, accompanied by feelings of loss of control and often shame or guilt afterward.

Bulimia

A disorder related to eating that involves cycles of overeating and then engaging in improper compensatory actions like vomiting to counteract the binge eating.

Anorexia Nervosa

A psychological and potentially life-threatening eating disorder characterized by an extremely low body weight, distorted body image, and an obsessive fear of gaining weight.