In a Simplified Banking System Subject to a 25 Percent

question 91

Multiple Choice

In a simplified banking system subject to a 25 percent required reserve ratio, a $1,000 open-market purchase by the Fed would cause the money supply to:

• A) increase by $1,000.
• B) decrease by $1,000.
• C) decrease by $4,000.
• D) increase by $4,000.

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Definitions:

Number of Successes

In a statistical experiment, it refers to the count of times an event of interest occurs.

Louisiana Territory

A vast region of North America that was purchased by the United States from France in 1803, doubling the size of the country and opening the way for westward expansion.

Gateway

A point of entry or access, often used metaphorically to describe something that serves as an entrance to something else, such as a technology, idea, or country.

Corruption

Dishonest or fraudulent conduct by those in power, typically involving bribery or the misappropriation of resources.