The Following Is a Consolidated Balance Sheet for the Chartered

question 46

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:

Tax Increases

Governmental action to raise the amount of money collected from taxes, often affecting income, sales, or property taxes.

Deadweight Loss

An inefficiency in the market where the total surplus of producer and consumer is not maximized due to factors like taxes or subsidies.

Elastic Demand

A situation where the quantity demanded of a good or service significantly changes in response to a change in price.

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand.