If a Single Banks Faces a Required Reserve Ratio of 20

question 73

Multiple Choice

If a single banks faces a required reserve ratio of 20 percent, has total reserves of $500,000, and checkable deposit liabilities of $400,000, what is the maximum amount of money this bank could create (add to the money supply) ?

• A) $420,000.
• B) $100,000.
• C) $80,000.
• D) $2,100,000.

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Definitions:

Central Route

A concept in the Elaboration Likelihood Model of persuasion that involves the thorough and thoughtful consideration of arguments leading to attitude change.

Persuasion

The process of influencing someone's beliefs, attitudes, intentions, motivations, or behaviors through communication and various techniques.

Motivated

Having a strong desire or willingness to act and achieve specific goals.

Commercial

Relating to or engaged in commerce; intended for or pertaining to the selling and buying of goods and services.