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If the Required Reserve Ratio Is 20 Percent and the Fed

question 172

Multiple Choice

If the required reserve ratio is 20 percent and the Fed buys a $10,000 security from a depository institution that currently has no excess reserves,what happens to the money supply,using the simple multiplier?

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Definitions:

Diplomatic Weapon

The use of diplomatic measures such as negotiations, treaties, sanctions, and alliances as tools to influence or pressure other nations to achieve foreign policy objectives.

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Thomas Jefferson, the third President of the United States, served from 1801 to 1809, known for his role in drafting the Declaration of Independence and the Louisiana Purchase.

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A constitutional point refers to a legal question or interpretation that pertains to the constitution of a country, often involving issues of individual rights, government powers, and the interpretation and application of constitutional law.

Protective Tariff

A tariff imposed on imports to protect domestic industries from foreign competition by increasing the cost of imported goods.

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