Suppose the Reserve Ratio Is 25% and Banks Do Not

question 34

Multiple Choice

Suppose the reserve ratio is 25% and banks do not hold excess reserves.When the Fed sells $40 million of bonds to the public who then deposit the proceeds into the banking system,

• A)bank reserves increase by $40 million and money supply could increase by a maximum of $40 million.
• B)bank reserves increase by $40 million and money supply could increase by a maximum of $160 million.
• C)bank reserves decrease by $40 million and money supply could decrease by a maximum of $40 million.
• D)bank reserves decrease by $40 million and money supply could decrease by a maximum of $160 million.

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Definitions:

Impression Management

The process by which individuals attempt to control the impressions others form of them, especially in social interactions.

Organizational Politics

The employment of influence and social connections within a company to implement modifications that advantage either the organization itself or the people belonging to it.

Advertising Campaign

is a series of coordinated promotional efforts across various media channels aimed at achieving specific marketing objectives.

Group Development Process

The group development process includes stages through which a group progresses, from formation to performing, as it matures and works towards achieving its goals.