If a Bank Has a Required Reserve Ratio of 25

question 58

Multiple Choice

If a bank has a required reserve ratio of 25 percent and there is $10,000 in deposits,what is the maximum possible change to the money supply?

• A) $40,000
• B) $10,000
• C) $0
• D) $2,500
• E) $7,500

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Definitions:

Amino Acid

Organic compounds serving as the building blocks of proteins, containing both amino and carboxylic acid functional groups.

Protein

Large, complex molecules made up of amino acids that perform a variety of functions in the body, including structural support, transport, and enzymatic activities.

Insulate

To coat or surround with material in order to prevent the passage or leakage of heat, electricity, or sound.

Lipids

A broad class of naturally occurring molecules that include fats, oils, waxes, and certain vitamins, characterized by their insolubility in water.