If the Reserve Ratio Is 5%,then an Increase in Bank

question 214

Multiple Choice

If the reserve ratio is 5%,then an increase in bank deposits by $100,000 could expand the money supply by:

• A) $5,000.
• B) $100,000.
• C) $500,000.
• D) $2 million.

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Definitions:

Rich Country

A nation characterized by a high gross domestic product (GDP) per capita, indicating a high standard of living, advanced technological infrastructure, and a well-developed economy.

Nonrenewable Resource

A nonrenewable resource is a natural resource that cannot be replenished or takes a very long time to replenish at the same rate it is consumed or used.

Saving Rates

The proportion of disposable income that is saved by households rather than spent on goods and services.

Real GDP

The total market value of all final goods and services produced in a country in a given year, adjusted for inflation.