The Following Is Information About a Banking System: New Currency

question 25

Multiple Choice

The following is information about a banking system: new currency deposited in the system = $40 billion; desired reserve ratio = 20%; excess reserves prior to the new currency deposit = $0.Refer to the above information.The banking system will be able to expand the money supply through loans by:

• A)$160 billion.
• B)$200 billion.
• C)$40 billion.
• D)$128 billion.

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Definitions:

Free Markets

Economic markets that are largely free from government intervention, where prices are determined by supply and demand.

Man Of System

Refers to an individual who believes in strictly applying their own theoretical systems to society, without accommodating for the variability of human nature.

Society Members

Individuals or entities that make up a community or group with shared customs, laws, or institutions.

Chess-Board

A square board used in the game of chess, consisting of 64 squares arranged in an 8x8 grid, alternating in color.