If the Required Reserve Ratio Is 10 Percent and the Fed

question 129

Multiple Choice

If the required reserve ratio is 10 percent and the Fed buys a $5,000 security from a depository institution,the money supply:

• A)increases by $15,000.
• B)increases by $5,000.
• C)decreases by $5,000.
• D)increases by $50,000.
• E)decreases by $50,000.

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Definitions:

Certificate of Waiver

A document that officially excuses a party from a certain obligation or allows a deviation from the standard requirements.

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Substances or compounds used in chemical reactions to detect, measure, examine, or produce other substances.