If the Simple Money Multiplier Is 20, the Required Reserve

question 180

Multiple Choice

If the simple money multiplier is 20, the required reserve ratio must be equal to _____

• A) 5 percent.
• B) 0 percent.
• C) 10 percent.
• D) 50 percent.
• E) 20 percent.

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Definitions:

Balance Budget

A financial statement in which revenues and expenditures are equal, resulting in no deficit or surplus.

GDP

The total market value or monetary sum of all final goods and services produced within a nation's boundaries during a defined timeframe is known as Gross Domestic Product.

Multiplier

In economics, a factor that quantifies the impact of an initial change in spending, income, or investment on the broader economy, amplifying the initial effect.

Inflationary Gap

A macroeconomic term referring to the situation where the demand for goods exceeds the supply, leading to increased prices or inflation.