If the Banking System Has $5 Million in Excess Reserves

question 216

Multiple Choice

If the banking system has $5 million in excess reserves and the required reserve ratio is 25 percent, what is the maximum amount by which the money supply can be increased?

• A)$25 million
• B)$20 million
• C)$5 million
• D)$2.5 million

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Definitions:

Skin Graft

A surgical procedure where healthy skin is transplanted to a damaged area of the body.

Blister

A small pocket of body fluid that forms in the upper layers of the skin, usually in response to rubbing, burning, or freezing.

Ecchymosis

A change in skin color due to blood leaking beneath it, usually resulting from a bruise.

Bulla

A large blister or fluid-filled vesicle on the skin, or a rounded cavity or space in bone or other anatomical structures.