Assume That the Reserve Requirement Is 10% and No Excess

question 168

Multiple Choice

Assume that the reserve requirement is 10% and no excess reserves are held. If an initial cash deposit of $10,000 is made, the money supply has the potential to increase by:

• A) $11,000.
• B) $100,000.
• C) $90,000.
• D) $110,000.

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Definitions:

Conservation

The principle in cognitive development that recognizes the ability to understand that redistributing material does not affect its mass, number, or volume.

Cognitive Development

The process by which individuals acquire the ability to think, learn, reason, and remember over time, often associated with childhood development.

Sensorimotor

Referring to a developmental stage in infants where they learn about the world through sensory experiences and motor activities.

Preoperational

A stage in Jean Piaget's theory of cognitive development where children from about 2 to 7 years old engage in symbolic play but struggle with logic and understanding the perspective of others.