The Banking System Currently Has $200 Billion of Reserves,none of Which

question 103

Multiple Choice

The banking system currently has $200 billion of reserves,none of which are excess.People hold only deposits and no currency,and the reserve requirement is 4 percent.If the Fed raises the reserve requirement to 10 percent and at the same time buys $50 billion worth of bonds,then by how much does the money supply change?

• A)It rises by $600 billion.
• B)It rises by $125 billion.
• C)It falls by $2,500 billion.
• D)None of the above is correct.

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Definitions:

Farmers Field LLC

A specific entity or company, potentially involved in real estate, agriculture, or sports facility development. However, without more context, further specificity is not possible.

Grain Co-op

An agricultural cooperative organization owned and operated by farmers for the processing, marketing, or selling of grains.

Misspelled Name

An error in the spelling of a name in a document, which may or may not affect the legality or validity of the document.

Indorse

To sign the back of a financial instrument, such as a check, to make it payable to someone other than the original payee or to endorse a document formally.