If the Required Reserve Ratio Is 10 Percent and the Fed

question 172

Multiple Choice

If the required reserve ratio is 10 percent and the Fed buys a $5,000 security from a depository institution, the money supply _____

• A) increases by $15,000.
• B) increases by $10,000.
• C) decreases by $15,000.
• D) decreases by $10,000.
• E) decreases by $50,000.

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Definitions:

Cooperative/Flexible

A mindset or organizational style that emphasizes working together and adapting to change or unforeseen circumstances.

Rigid

Non-flexible or strictly enforced without deviation or exception.

Structured

Organized in a coherent and systematic manner, often referring to financial products, settlements, or organizational planning.

Time-Consuming

Requiring a great deal of time to complete, often more than what is considered reasonable or necessary.