If the Number of Beer Producers Decreases

question 96

Multiple Choice

If the number of beer producers decreases:

• A) the demand for beer increases.
• B) the demand for beer decreases.
• C) the supply of beer decreases.
• D) the supply of beer increases.

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Definitions:

Money Supply

The collective volume of monetary assets within an economy at a certain point, including cash, coins, and balances in checking and savings accounts.

Fractional-reserve Banking

A banking system where banks hold only a fraction of deposits as reserves and lend out the remainder, thereby creating additional money supply.

Bank Runs

Situations where a large number of bank customers withdraw their deposits simultaneously due to fears that the bank will become insolvent.

Reserve Requirement Ratio

The reserve requirement ratio is the fraction of deposits that banks are required to keep on hand as reserves, determined by the central bank.