If the Fed Buys a $100,000 Government Security from a Bank

question 1

Multiple Choice

If the Fed buys a $100,000 government security from a bank when the desired reserve ratio is 10 percent and the currency drain is 50 percent, the bank can loan a maximum of

• A) $50,000.
• B) $40,000.
• C) $100,000.
• D) $90,000.
• E) $60,000.

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Definitions:

Emotional Disturbance

A term used in educational settings to describe students who exhibit emotional or behavioral responses so different from their peers that they adversely affect their educational performance.

Agoraphobia

An anxiety disorder characterized by intense fear of places where escape might be difficult, or help might not be available, often leading to avoidance of such places.

Panic Disorder

A mental health condition characterized by sudden and repeated episodes of intense fear accompanied by physical symptoms such as chest pain, heart palpitations, and shortness of breath.

Avoidance Behaviors

Avoidance behaviors are actions taken to prevent or evade a perceived threat or discomfort, often seen in anxiety and other psychological conditions.