In the Simple Deposit Expansion Model,if the Required Reserve Ratio

question 126

Multiple Choice

In the simple deposit expansion model,if the required reserve ratio is 10 percent and the Fed increases reserves by $100,checkable deposits can potentially expand by

• A)$100.
• B)$250.
• C)$500.
• D)$1,000.

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment that cannot be eliminated through diversification.

General Health

A broad term referring to the overall physical and mental condition and well-being of an individual or population.

Unsystematic Risk

The risk of price change due to the unique circumstances of a specific security, as opposed to the overall market.

Stocks

Shares of ownership in a corporation, giving holders a claim to part of the company's assets and profits.