Suppose That There Are No Excess Reserves in the Banking

question 40

Multiple Choice

Suppose that there are no excess reserves in the banking system and the current amount of demand deposits is $100,000. If the monetary authorities lower the required reserve ratio from 10% to 5%:

• A) the amount of excess reserves in the banking system will fall.
• B) the amount of excess reserves in the banking system will remain the same.
• C) the money-creating potential of the banking system will decline.
• D) the money-creating potential of the banking system will rise.

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Definitions:

Enough Sleep

Receiving the adequate amount of sleep necessary for optimal health, performance, and well-being.

Biological Clock

An internal timing mechanism in organisms that regulates physiological and behavioral functions in a rhythmic cycle, such as sleep-wake patterns or reproductive cycles.

Desynchronization

The process by which two or more systems that were once operating in harmony lose their synchronized state.

Third Shift

Refers to the working hours from midnight to 8 AM, also known as the graveyard shift, which can disrupt natural circadian rhythms.