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

question 23

Multiple Choice

Assuming all excess reserves are loaned out, currency holdings by the public are zero, and a reserve ratio of 20 percent, an initial deposit of $6,000 will lead to a total increase in deposits of

• A) $12,000.
• B) $24,000.
• C) $30,000.
• D) $36,000.

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Definitions:

Opportunity Cost

The penalty of not picking the second most preferable solution in the decision process.

Agricultural Output

The total quantity of agricultural products, such as crops and livestock, produced within a specified period.

Rural India

Refers to the countryside areas of India, often characterized by agricultural practices, lower population density, and less access to infrastructure and technology than urban areas.

Efficient Markets

Markets in which all available information is fully reflected in asset prices, making it impossible to consistently achieve higher returns than the overall market.