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:

Group Size

The number of individuals present within a social group, which can influence the group's dynamics and interactions.

Decision Time

The period during which an individual evaluates available options and chooses a course of action.

Neurons

Specialized cells transmitting nerve impulses; the fundamental units of the brain and nervous system.

Terminal Buttons

The small knobs at the end of an axon that release chemicals (neurotransmitters) to transmit the nerve impulse to the next neuron.