Suppose That a Country Has $50 Billion in Bank Reserves

question 87

Multiple Choice

Suppose that a country has $50 billion in bank reserves, $100 billion in currency held by the public, and $500 billion in bank deposits. The currency drain ratio is

• A)18%.
• B)50%.
• C)30%.
• D)10%.
• E)20%.

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Definitions:

Cross Elasticity

A measure of how the quantity demanded of one good responds to a change in the price of another good.

Perfectly Inelastic

A situation in demand or supply in which the quantity demanded or supplied does not change regardless of changes in price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price.

Income Elasticity

A measure of how much the demand for a product or service changes relative to a change in consumers' income.