Assuming Initially That the Required Reserve Ratio = 10%,the Currency-Deposit

question 216

Multiple Choice

Assuming initially that the required reserve ratio = 10%,the currency-deposit ratio = 75%,and the excess reserve ratio = 156%,an increase in the required reserve ratio to 15% causes the M1 money multiplier to ________,everything else held constant.

• A)increase from 0.15 to 0.33
• B)increase from 0.54 to 0.67
• C)decrease from 0.73 to 0.71
• D)decrease from 1.67 to 1.54

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Definitions:

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise made to a second party if the latter has reasonably relied on that promise to their detriment.

Promisee

The party in a contract who is to receive the benefit or performance specified in the agreement.

Promise

A declaration or assurance that one will do something or that a particular thing will happen.

Offer

A proposal by one party to another to enter into a legally binding contract with specific terms.