The Following Is a Consolidated Balance Sheet for the Chartered

question 159

Multiple Choice

The following is a consolidated balance sheet for the chartered banking system.All figures are in billions.Assume that the desired reserve ratio is 20 percent. Refer to the above information.If there is a deposit of $10 billion of new currency into chequing accounts in the banking system, excess reserves will increase by:

• A)$1 billion.
• B)$2 billion.
• C)$8 billion.
• D)$10 billion.

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Definitions:

Elastic

Describes a situation where the demand for a product or service significantly changes in response to price changes.

Inelastic

A characteristic of demand or supply where the quantity demanded or supplied changes by a smaller percentage than changes in the price.

Exhaustive Governmental Outlay

Government spending that directly utilizes resources for providing goods and services, distinct from transfer payments like subsidies and social benefits.

Subsidy Check

Financial assistance given by the government to individuals, businesses, or institutions to support or promote economic activities.