The Reserve Ratio Is 10 Percent

question 156

Multiple Choice

The reserve ratio is 10 percent. Depositors regularly keep 10 percent of their deposits as cash. If the Fed buys $1 million of U.S. government securities, excess reserves

• A) increase by $800,000.
• B) increase by $810,000.
• C) increase by $900,000.
• D) increase by $1 million.

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Definitions:

Unjustified Belief

A conviction maintained without sufficient evidence or rational justification.

Catatonia

A psychiatric condition characterized by periods of immobility and stupor, often interspersed with episodes of hyperactivity or agitation.

Disorder

A pattern of behavior or psychological functioning that is distressing to the individual and/or disruptive to others and is often considered to be clinically significant.

Movement

refers to the act or process of moving or being moved, which can apply to physical, social, or intellectual movements.