Assume That the Banking System Has $200 Billion in Reserves

question 172

Multiple Choice

Assume that the banking system has $200 billion in reserves.There are no excess reserves in the system.If the reserve requirement is decreased from 10 percent to 8 percent, what will happen to the level of excess reserves in the system?

• A)There will be a deficiency of $40 billion in reserves.
• B)There will be a deficiency of $20 billion in reserves.
• C)There will be $20 billion in excess reserves.
• D)There will be $40 billion in excess reserves.

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Definitions:

Mental Phenomena

Any cognitive, emotional, and perceptual experiences or activities of the mind.

Brain Structures

The distinct anatomical parts of the brain, each having specialized functions, such as the cerebellum for coordination and the hippocampus for memory.

Pituitary Gland

A small gland at the base of the brain that produces hormones influencing various physiological processes including growth, reproduction, and metabolism.

Hypothalamus

A region of the brain that plays a crucial role in many important functions, including releasing hormones and regulating body temperature.