Assume All Banks in the System Started Have a 10

question 89

Multiple Choice

Assume all banks in the system started have a 10 percent required reserve ratio and the Fed made a $20,000 open market purchase. The result would be a(n) :

• A) $200,000 expansion of the money supply.
• B) $20,000 expansion of the money supply.
• C) $20,000 contraction of the money supply.
• D) infinite contraction of the money supply.

---

Definitions:

Cash Offer

An all-cash bid to purchase goods or property, indicating the buyer's intention to pay the full amount in cash rather than financing.

Service Center

A Service Center is a dedicated unit or facility that provides specialized support or services to customers, typically in the area of maintenance, repair, or customer assistance.

Effective Offer

A proposal made in such terms that upon acceptance, a legally enforceable contract is formed.

Communicated

The process of conveying information or expressing ideas and feelings through speech, writing, or other mediums.