Consider the Following Information About a Banking System: New Currency

question 105

Multiple Choice

Consider the following information about a banking system: new currency deposited in the system = $40 billion, legal reserve ratio = 0.20, excess reserves prior to the currency deposit = $0. With the $40 billion deposit, the
Banking system will be able to expand the money supply through loans by

• A) $160 billion.
• B) $200 billion.
• C) $40 billion.
• D) $128 billion.

---

Definitions:

Antibodies

Proteins produced by the immune system to help protect the body from harmful invaders like bacteria and viruses.

Albino

An individual lacking normal pigmentation due to a genetic condition that affects the production of melanin in the skin, hair, and eyes.

Homozygous

State of having identical allelic genes at one or more paired loci in homologous chromosomes.

Pigmentation

The coloring of a person's skin, hair, or eyes due to the deposition of melanin, a natural pigment produced by certain cells called melanocytes.