Suppose the Desired Reserve Ratio Is 0

question 39

Multiple Choice

Suppose the desired reserve ratio is 0.2, and the Bank of Canada buys $3,000 of Canadian government securities.What is the maximum amount by which the money supply can increase?  

• A) $200 
• B) $600 
• C) $3,000 
• D) $15,000

---

Definitions:

Stockout Risks

The potential for inventory shortages that can result in lost sales, customer dissatisfaction, and negative impacts on a business's reputation and income.

EOQ

Economic Order Quantity, a formula used in inventory management to determine the optimal order size that minimizes total inventory costs.

Safety Stock

Additional inventory kept in reserve to protect against stockouts due to variability in demand or supply.

Reorder Point

The inventory level at which a new order should be placed to replenish stock before it runs out.