Suppose the Federal Reserve Increases Deposits at Financial Institutions by $50

question 16

Multiple Choice

Suppose the Federal Reserve increases deposits at financial institutions by $50 billion through its open market operations.If the reserve requirement for all deposits is 8%,what is the maximum impact the Fed's actions can have on total deposits?

• A) $575 billion increase
• B) $54.3 billion increase
• C) $625 billion increase
• D) An increase greater than $1 trillion
• E) Total deposits would decrease,but there is not enough information to compute the amount.

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Definitions:

Gender

The range of characteristics distinguishing between masculinity and femininity, often based on social, cultural, and psychological factors rather than solely biological differences.

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Having ownership or the responsibility of caring for pets, which are domesticated animals kept for companionship or pleasure.

Cross-Classification Table

A tabular method for displaying the frequency distribution among two or more categorical variables simultaneously.

Nominal Variables

Variables that represent categorial data which can be labeled or named but not logically ordered.