If the Reserve Requirement Is 20 Percent and a New

question 28

Multiple Choice

If the reserve requirement is 20 percent and a new deposit of $10,000 in cash is made by a customer to their checking account, by how much are excess reserves increased?

• A)$10,000
• B)$8,000
• C)$4,000
• D)$2,000

Analyze the effects of monetary policy actions on the economy, including those intended to address recessions and inflations.

Recognize the legal and operational framework within which the Federal Reserve operates, including its interactions with commercial banks.

Distinguish between different types of reserves and the reasons banks hold them.

Understand the implications of monetary policy on international trade and exchange rates.

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Definitions:

Dissonance Theory

A psychological theory suggesting that inconsistency among beliefs, attitudes, or behaviors causes discomfort, leading individuals to change them to reduce the discomfort.

Psychological Inconsistency

A state where an individual's thoughts, feelings, and behaviors do not align, leading to internal conflict.

Theory Development

The process of creating and refining concepts and propositions to explain phenomena in a systematic way.

Deduction

is a logical process wherein specific conclusions are drawn from general principles or premises.