If the Reserve Requirement Is 25% and a New Deposit

question 96

Multiple Choice

If the reserve requirement is 25% and a new deposit leads to a potential increase in the money supply of $4,000, the amount of the new deposit must equal

• A) $1,000.
• B) $4,000.
• C) $5,000.
• D) $10,000.

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Definitions:

Id

In psychoanalytic theory, the part of the personality containing innate biological drives and instincts. It operates on the pleasure principle, seeking immediate gratification.

Pleasure Principle

A concept in psychoanalytic theory stating that individuals seek immediate gratification of needs and desires to avoid pain or discomfort.

Rationality

The quality of being based on or in accordance with reason or logic, often discussed in the context of decision-making processes.

Logical Thinking

The process of reasoning consistently and rigorously, often following a sequence of steps based on established rules and principles.