If Reserves in the Banking System Increase by $100, Then

question 110

Multiple Choice

If reserves in the banking system increase by $100, then chequable deposits will increase by $500 in the simple model of deposit creation when the desired reserve ratio is ________.

• A) 0.01
• B) 0.10
• C) 0.05
• D) 0.20

---

Definitions:

Pension Scheme

A plan or fund that provides retirement income to employees, funded by contributions from employer, employee or both.

Related Party

Individuals or entities that have a connection to the reporting entity that could influence the financial and operating policies of the entity.

Domestic Partner

An individual who lives with another in a long-term relationship similar to a marriage, recognized by some jurisdictions for legal and financial benefits.

Reporting Entity

An entity that is required, or chooses, to prepare financial statements.