What Is the Maximum Change in Total Deposits at Financial

question 5

Multiple Choice

What is the maximum change in total deposits at financial institutions if the Fed sells $120 billion of government securities to dealers,and the reserve requirement applicable to all deposits is 10%?

• A) $1.20 trillion decrease
• B) $133 billion increase
• C) $1.08 trillion increase
• D) $1.08 trillion decrease
• E) None of the above.

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Definitions:

Variance

Variance is a statistical measure that represents the degree to which a set of observations differ from each other. It is the expectation of the squared deviation of a random variable from its mean, and it gives insights into the dispersion of a dataset.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values.

Nominal Data

Data categorized into discrete groups or categories without any inherent order or ranking.

Biological Sex

Biological sex refers to the physical and physiological characteristics, such as chromosomes, hormone levels, and reproductive/sexual anatomy, that are typically used to classify individuals as male, female, or intersex.