There Is $5,000,000 of Currency in Econland, All Held by Banks

question 84

Multiple Choice

There is $5,000,000 of currency in Econland, all held by banks as reserves. The public does not hold any currency. If the banks' desired reserve/deposit ratio is 0.25, then the money supply equals:

• A)$5,000,000
• B)$6,250,000
• C)$10,000,000
• D)$20,000,000

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Definitions:

Managers

Individuals responsible for controlling or administering all or part of a company or similar organization.

Members

Individuals or entities that are part of an organization or group and typically have certain rights, privileges, or responsibilities associated with membership.

Substantiation

The provision of evidence or proof to support a claim, allegation, or request, typically required in legal and financial contexts.

Limited Liability Companies

A business structure in the United States whereby the owners are not personally liable for the company's debts or liabilities.