Assume That There Are No Excess Reserves in the Banking

question 7

Multiple Choice

Assume that there are no excess reserves in the banking system when the reserve requirement is 20%.The purchase of $10,000 in U.S.government securities by the Fed from Academy National Bank has the potential to ultimately increase the money supply by:

• A)$2,000.
• B)$8,000.
• C)$10,000.
• D)$20,000.
• E)$50,000.

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Definitions:

Always

A term indicating a constant or unchanging condition.

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