Suppose That the Required Reserve Ratio Is 0

question 21

Multiple Choice

Suppose that the required reserve ratio is 0.25. If a customer withdraws $10 million from a bank, then the money supply could potentially:

• A) decrease by $25 million.
• B) increase by $40 million.
• C) increase by $2.5 million.
• D) decrease by $40 million.

---

Definitions:

Proposal

A formal offer or plan submitted for consideration, approval, or discussion to achieve a specific goal or project.

Recipient's Challenges

Difficulties or obstacles faced by the receiver of a message or service, affecting their ability to fully understand or utilize it.

Attractively

In a manner that draws interest or attention in a pleasing way.

Proposal

A plan or suggestion, especially a formal or written one, put forward for consideration or discussion by others.