The Banking System Currently Has $50 Billion of Reserves,none of Which

question 206

Multiple Choice

The banking system currently has $50 billion of reserves,none of which are excess.People hold only deposits and no currency,and the reserve requirement is 10%.If the Fed raises the reserve requirement to 12.5% and at the same time sells $10 billion dollars of bonds,then by how much does the money supply change?

• A)It falls by $20 billion.
• B)It falls by $110 billion.
• C)It falls by $180 billion.
• D)None of the above is correct.

---

Definitions:

Functionalism

A theoretical perspective that views society as a complex system whose parts work together to promote solidarity and stability.

Feminism

A movement aimed at achieving equality between the genders, particularly focusing on women's rights and issues.

Class Conflict

The tension or antagonism between different social classes, often arising from disparities in wealth, power, and interests.

Talcott Parsons

An American sociologist known for developing several theories on society, social action, and systems, most notably his action theory and system theory.