You Deposit $4,000 in Currency in Your Checking Account

question 200

Multiple Choice

You deposit $4,000 in currency in your checking account. The bank holds 20 percent of all deposits as desired reserves. As a direct result of your deposit, your bank will make loans and by so doing will create

• A) $1,600 of new money.
• B) $200 of new money.
• C) $3,200 of new money.
• D) $800 of new money.

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Definitions:

Spending Power

The ability of an individual or entity to purchase goods and services, influenced by income, savings, and credit availability.

Corporate Political Speech

Expressions by corporations regarding political issues or candidates, protected under certain legal frameworks to varying degrees.

First Amendment

An amendment to the United States Constitution that protects various rights, including freedom of speech, religion, press, assembly, and the right to petition the government.

Privileges and Immunities Clause

A provision in the U.S. Constitution that prevents a state from treating citizens of other states in a discriminatory manner.