If the Banking System Has $20 Billion in Excess Reserves

question 103

True/False

If the banking system has $20 billion in excess reserves and the reserve ratio is 10 percent, the system can
increase its loans by a maximum of $22 billion.

---

Definitions:

Demand Schedule

A table that shows the quantity of a good or service demanded at different prices.

Natural Monopolist

A single firm that can supply a good or service to an entire market at a lower cost than could two or more firms, leading to a natural monopoly situation.

LRAC Curve

The Long-Run Average Cost curve, showing the lowest average cost at which a firm can produce any given level of output in the long run when all inputs are variable.

Patents

Legal documents granting an inventor exclusive rights to produce, use, and sell an invention for a certain period of time.