Assume That the Required Reserve Ratio Is 20 Percent

question 42

Multiple Choice

Assume that the required reserve ratio is 20 percent.If the Federal Reserve buys $80 million in government securities from the general public, then the money supply will immediately

• A)increase by $0 with this transaction, and the maximum money-lending potential of the commercial banking system will increase by $400 million.
• B)increase by $0 with this transaction, but the maximum money-lending potential of the commercial banking system will increase by $320 million.
• C)increase by $80 million with this transaction, and the maximum money-lending potential of the commercial banking system will decrease by another
• D)increase by $80 million with this transaction, and the maximum money-lending potential of the commercial banking system will increase by another

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Definitions:

Resource Partitioning

The process by which natural selection drives competing species into different patterns of resource use or different niches to reduce competition.

Competition Intensity

The degree to which organisms or businesses vie for the same resources or markets.

Commercially Valuable

Refers to products, services, or properties that have the potential to generate a significant amount of income or profit in the marketplace.

Shark Species

Various types of sharks that exist within the class Chondrichthyes, differing in size, habitat, diet, and behavior, contributing to the biodiversity of marine ecosystems.