In the Simple Deposit Expansion Model,if the Required Reserve Ratio

question 126

Multiple Choice

In the simple deposit expansion model,if the required reserve ratio is 10 percent and the Fed increases reserves by $100,checkable deposits can potentially expand by

• A)$100.
• B)$250.
• C)$500.
• D)$1,000.

---

Definitions:

Market Power

The ability of a firm or group of firms to influence or control prices or output in a particular market.

Barriers to Entry

are obstacles that make it difficult for new competitors to enter an industry, including high startup costs, strict regulations, and established brand loyalty.

Monopolistically Competitive

A market structure where many companies sell products that are similar but not identical.

Monopolies

Market structures characterized by a single seller controlling a large portion of the market and the lack of viable competition.