Suppose the Fed's Required Reserve Ratio Is 12

question 2

Multiple Choice

Suppose the Fed's required reserve ratio is 12%. Further suppose that the Fed buys $50 million of U.S. Treasury securities from a dealer who deposits the check, which is drawn on the Fed, with Bank A. Bank A's reserve account with the Fed has increased by $50 million and so have its (demand) deposits, its total reserves, and the overall level of M₁. How much has required reserves risen?

• A) $50 million
• B) $44 million
• C) $10 million
• D) $6 million

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Definitions:

Synapse

The junction between two neurons where neurotransmitters are released, allowing signals to pass from one neuron to another.

Neurotransmitter

Chemicals in the brain that transmit signals from one neuron to another, influencing a wide range of bodily and psychological functions.

Norepinephrine

A neurotransmitter and hormone involved in arousal, alertness, and the stress response.

Dopamine

A neurotransmitter involved in controlling the brain's reward and pleasure centers, as well as regulating movement and emotional responses.