If the Desired Reserve Ratio Is Five Percent, Currency in Circulation

question 9

Multiple Choice

If the desired reserve ratio is five percent, currency in circulation is $400 billion, and chequable deposits are $800 billion, then the money multiplier is approximately ________.

• A) 2.5
• B) 2.72
• C) 2.3
• D) 0.551

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Definitions:

Kingdom Plantae

Kingdom Plantae comprises all known plants, characterized by their ability to perform photosynthesis with chlorophyll, having cellulose in cell walls, and growing through cell division.

Corn

A cereal plant that yields large kernels set in rows on a cob, widely grown in the Americas for food, livestock feed, and biofuel production.

Cancer Drug

Medications specifically designed or used to prevent, treat, or slow the progression of cancer by targeting specific cells or pathways.

Model

Simulation of a process that aids conceptual understanding until the process can be studied firsthand; a hypothesis that describes how a particular process could possibly be carried out.