Assuming All Excess Reserves Are Loaned Out, Currency Holdings by the Public

question 141

Multiple Choice

Assuming all excess reserves are loaned out, currency holdings by the public are zero, and a reserve ratio of 5 percent, an initial deposit of $10,000 will lead to a total increase in deposits of

• A) $500.
• B) $10,000.
• C) $50,000.
• D) $200,000.

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Definitions:

Hypothesis

A proposed explanation for a phenomenon, subject to further testing and experimentation.

Photosynthesis

The process by which green plants, algae, and some bacteria convert light energy and carbon dioxide into chemical energy in the form of glucose, releasing oxygen as a byproduct.

Producers

Organisms, mainly plants and algae, that can produce their own food through the process of photosynthesis, serving as the base of the food chain.

Reproduction

The process in biology where offspring are generated from their progenitors.