The Banking System Currently Has $10 Billion of Reserves,none of Which

question 72

Multiple Choice

The banking system currently has $10 billion of reserves,none of which are excess.People hold only deposits and no currency,and the reserve requirement is 10 percent.If the Fed raises the reserve requirement to 12.5 percent and at the same time buys $1 billion worth of bonds,then by how much does the money supply change?

• A)It falls by $12 billion.
• B)It falls by $19 billion.
• C)It falls by $21 billion.
• D)None of the above is correct.

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Definitions:

Schizotypal Personality Disorder

A disorder characterized by severe social anxiety, thought disorder, paranoid ideation, derealization, transient psychosis, and often unconventional beliefs.

Antidepressants

Medications primarily used for treating depression but may also be used for other conditions, affecting neurotransmitters in the brain.

Distress

Negative stress that results from being exposed to stressors, leading to physical or psychological discomfort.

Schizotypal Personality Disorder

A mental disorder characterized by severe social anxiety, thought disorder, paranoid ideation, derealization, transient psychosis, and often unconventional beliefs.