If the Reserve Requirement Was 10 Percent, a $100 Deposit

question 91

Multiple Choice

If the reserve requirement was 10 percent, a $100 deposit could result in a ________ increase in new deposits for all banks in the system.

• A) $200
• B) $500
• C) $1000
• D) $10 000
• E) $100 000

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Definitions:

Government Policy

Strategies and measures adopted by a government to guide its actions in the pursuit of specific goals and objectives.

Consumer Surplus

The difference between what consumers are willing to pay for a good and what they actually pay, representing the benefit consumers receive from purchasing the good at a lower price.

Price Floor

A government- or group-imposed price control that sets the lowest price at which a product can be sold.

Price Support

Government interventions to maintain the price of a commodity or product at a certain level, often through purchasing excess supply or providing subsidies to producers.