Suppose the Required Reserve Ratio Is 0

question 53

Multiple Choice

Suppose the required reserve ratio is 0.2 and the Fed buys $100,000 in government securities from Big Bank.The commercial banking system creates _____ as a result of this initial injection by the Fed.

• A)$1,000,000
• B)$500,000
• C)$100,000
• D)$80,000
• E)$200,000

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Definitions:

Decibels

A unit of measurement for sound intensity, symbolized as dB, representing the logarithmic comparison between two power levels.

Intensity

The magnitude or strength of a phenomenon or a quality, often used in contexts ranging from physics to emotional experiences.

Cochlea

A spiral-shaped, fluid-filled inner ear structure crucial for converting sound waves into electrical signals that can be interpreted by the brain as sound.

Tectorial Membrane

A structure located within the cochlea of the inner ear, playing a crucial role in the process of hearing by interacting with hair cells.