Suppose the Reserve Ratio Is 20 Percent and the Public

question 41

Multiple Choice

Suppose the reserve ratio is 20 percent and the public holds $10 million in cash.Then the public decides to withdraw $5 million from the banks.How does the money supply eventually change?

• A)The money supply falls by $5 million.
• B)The money supply falls by $10 million.
• C)The money supply falls by $25 million.
• D)The money supply falls by $35 million.

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Definitions:

Ancestor Worship

A religious practice based on the belief that deceased family members have a continued existence and may possess the ability to influence the fortune of the living.

Departed Family Members

Relatives who have passed away, leaving a void in the family structure and dynamic.

Senior Citizens

Individuals of an older age, typically those who are retired from work and over the age of eligibility for certain age-related benefits and discounts.

Political Power

The capacity or ability of a person or group to influence or control the actions and decisions of others within a political system.