Given a 25 Percent Desired Reserve Ratio, Assume the Chartered

question 90

Multiple Choice

Given a 25 percent desired reserve ratio, assume the chartered banking system is loaned up.Now assume the desired reserve ratio falls to 20 percent.As a result of this reduction:

• A)we can expect bank lending and bank profits to decline.
• B)each dollar of bank reserves will now support a maximum of $5 of demand deposits.
• C)the banking system must now reduce outstanding loans by 5 percent.
• D)the banking system can now increase lending by 5 percent.

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Definitions:

Mean

The arithmetic average of a set of numbers, calculated by dividing the sum of the numbers by the count of numbers.

Confidence Interval

A confidence interval is a range of values derived from sample statistics that is likely to contain the value of an unknown population parameter, with a specified level of confidence.

Confidence Level

The probability or likelihood, expressed as a percentage, that a specified interval will contain the true population parameter.

Mean Width

An average measure of the width of a set of objects or figures, calculated by summing the widths and dividing by the number of objects.