Assume That the Required Reserve Ratio Is 20 Percent

question 144

Multiple Choice

Assume that the required reserve ratio is 20 percent.If the Federal Reserve buys $80 million in government securities from commercial banks, 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 increase by another
• D)increase by $80 million with this transaction, and the maximum money-lending potential of the commercial banking system will decrease by another

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Definitions:

Nonlinear Molecule

A molecule that does not have a straight-line or linear shape, often having a bent or three-dimensional structure.

Vibrational Modes

The different ways in which the atoms in a molecule can move relative to each other, important in the study of molecular IR spectroscopy.

Atoms

The smallest units of matter that retain the properties of an element, comprising protons, neutrons, and electrons.

Stretching Vibration

A vibrational movement in molecules where atoms move along the line of the bond, changing the bond length.