Suppose the Required Ratio of Reserves to Deposits Is 1:9,banks

question 23

Multiple Choice

Suppose the required ratio of reserves to deposits is 1:9,banks have no excess reserves,one person withdraws $10,000 from a checking account and stuffs it under a mattress,and no other person withdraws cash from the banking system.When the process has worked itself out,the money supply will show an additional decline of

• A) $1,111.
• B) $8,889.
• C) $11,111.
• D) $80,000.
• E) $90,000.

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Definitions:

Sensation And Perception

The processes by which we sense our environment through touch, taste, sight, sound, and smell (sensation), and interpret these sensations to form a mental representation (perception).

Psychoanalysis

A therapeutic approach and theory of mind developed by Sigmund Freud, focusing on the unconscious mind, repressed conflicts, and childhood experiences.

Psychological Problems

Mental or emotional issues affecting an individual's thinking, behavior, and ability to function, often requiring clinical intervention.

Sigmund Freud

An Austrian neurologist best known for developing the theories and techniques of psychoanalysis.