In a Simplified Banking System with a 20 Percent Required

question 23

Multiple Choice

In a simplified banking system with a 20 percent required reserve ratio, a $1,000 open-market sale by the Fed would cause the money supply to:

• A) increase by $200.
• B) decrease by $200.
• C) decrease by $5,000.
• D) increase by $5,000.

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Definitions:

Hypothalamus

A brain structure that helps maintain various bodily functions, including eating and hunger.

Acute Stress Disorder

A psychiatric condition characterized by the development of severe anxiety, dissociation, and other symptoms that occur within a month after exposure to a traumatic event.

Hysteria

A term once used to describe what are now known as conversion disorder, somatic symptom disorder, and illness anxiety disorder.

Generalized Anxiety Disorder

A disorder marked by persistent and excessive feelings of anxiety and worry about numerous events and activities.