Isabel Receives a Check for $7,000 from Kermit and Deposits

question 123

Multiple Choice

Isabel receives a check for $7,000 from Kermit and deposits it in her bank. Suppose that the reserve ratio is 10 percent. As a result of this transaction the money supply will

• A) increase by $70,000.
• B) decrease by $63,000 and then increase by $70,000.
• C) decrease by $70,000 and then increase by $63,000.
• D) not change.

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Definitions:

Consumer Taste

Preferences and desires of consumers regarding products and services, influencing their purchasing behavior and choices.

Technology

Utilizing scientific principles for practical objectives, notably in the industrial realm.

Outward

Often used in economics to refer to an expansion or increase, such as in outward economic growth, indicating increasing production, income, or development.

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