The Maximum Amount by Which the Entire Banking System Can

question 121

Multiple Choice

The maximum amount by which the entire banking system can create money is equal to:

• A)a fraction of its excess reserves.
• B)a fraction of its required reserves.
• C)a multiple of its total reserves.
• D)a multiple of its excess reserves.
• E)its excess reserves.

---

Definitions:

Utility Function

Describes how a consumer ranks different baskets of goods based on the level of satisfaction or utility derived from them.

Expected Utility

A concept in economics that represents a consumer's preference for certain outcomes, quantified as the weighted average of utility over all possible outcomes.

Probability

The quantification of how probable it is for an event to take place, indicated by a value ranging from 0 to 1.

Strictly Convex Preferences

Strictly convex preferences indicate a consumer's increasing marginal rate of substitution, reflecting a stronger preference for balanced bundles of goods over extremes.