Suppose That the Banking System Has Excess Reserves of $10

question 80

Multiple Choice

Suppose that the banking system has excess reserves of $10 million, the desired reserve ratio is 10 percent and the currency drain ratio is 40 percent. By how much will the quantity of money increase?

• A)$12.5 million
• B)$28 million
• C)$50 million
• D)$40 million
• E)$22 million

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Definitions:

Affiliation Motive

Being motivated by one’s relationships with others.

Power Motive

An individual's desire to exert control or influence over others or situations.

Immune System

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Extraversion

A personality trait characterized by outgoingness, high energy, and positive emotions towards social interaction.