Which of the Following Is a Valid Statement

question 61

Multiple Choice

Which of the following is a valid statement?

• A) The required reserve ratio equals the required reserves as a percentage of total deposits.
• B) The required reserves equal the maximum reserves required by the Fed.
• C) Excess reserves equal total reserves plus required reserves.
• D) The required reserve ratio equals percentage of savings account deposit, but not checkable deposits, required by the Fed.

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Definitions:

Theory of Consumer Choice

An economic framework describing how consumers make decisions to allocate their resources optimally among various goods and services.

Indifference Curve

A graph representing combinations of goods among which a consumer is indifferent, showing trade-offs between two goods.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget and prices.

Substitution Effect

The substitution effect describes the change in consumption patterns due to a change in relative prices, leading consumers to substitute a product for a cheaper alternative.