If the Fed Sells $10 Million in Bonds to a Bank

question 235

Multiple Choice

If the Fed sells $10 million in bonds to a bank, and the required reserve ratio is 20 percent, then the banking system can:

• A) decrease the money supply by up to $10 million.
• B) decrease the money supply by up to $40 million.
• C) decrease the money supply by up to $50 million.
• D) decrease the money supply by up to $ 2 million.
• E) increase the money supply by up to $50 million.

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Definitions:

Employee Resistance

The opposition or pushback from employees against changes or policies implemented by management.

Overwhelmed Feeling

A state of experiencing too much pressure or too many demands emotionally or mentally, making it difficult to cope.

Self-Centred Thinking

A mindset where an individual prioritizes their own needs and perspectives over those of others.