In the Simple Deposit Expansion Model,if the Fed Extends a $100

question 196

Multiple Choice

In the simple deposit expansion model,if the Fed extends a $100 discount loan to a bank that previously had no excess reserves,deposits in the banking system can potentially increase by

• A)$10.
• B)$100.
• C)$100 times the reciprocal of the required reserve ratio.
• D)$100 times the required reserve ratio.

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Definitions:

Union Pacific

A major railroad company in the United States, primarily operating in the western two-thirds of the country.

Central Pacific

Often refers to the central area of the Pacific Ocean, but can also denote the Central Pacific Railroad, a key portion of the First Transcontinental Railroad in the United States.

Clement Vallandigham

A controversial American politician and leader of the Copperhead faction of anti-war Democrats during the Civil War, known for his opposition to Abraham Lincoln's policies.

Banished

The act of officially or formally expelling someone from a community, country, or organization, often as a punishment.