If the Reserve Requirement Is 25% and $5,000 Is Injected

question 112

Multiple Choice

If the reserve requirement is 25% and $5,000 is injected into the banking system, the maximum expansion in the money supply would be:

• A)$1,250
• B)$20,000
• C)$6,667
• D)none of the above

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Definitions:

Input Costs

Input costs are the prices of the raw materials, labor, and other resources required to produce a good or service.

Price Change

A variation in the cost of a good or service over time.

Job Enlargement

The process of adding more tasks to a job to increase its scope and the variety of work performed.

Worker Dissatisfaction

A state where employees are unhappy and dissatisfied with their job conditions, leading to lower productivity and morale.