The Banking System Currently Has $10 Billion of Reserves,none of Which

question 156

Multiple Choice

The banking system currently has $10 billion of reserves,none of which are excess.People hold only deposits and no currency,and the reserve requirement is 10 percent.If the Fed raises the reserve requirement to 20 percent and at the same time buys $1 billion of bonds,then by how much does the money supply change?

• A) It falls by $45 billion.
• B) It falls by $52 billion.
• C) It falls by $55 billion.
• D) None of the above is correct.

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Definitions:

Cultural Pluralism

A condition or society in which various cultural groups maintain their unique cultural identities while coexisting peacefully within a larger society.

Multiculturalism

A societal approach or policy that endorses the preservation of different cultures or cultural identities within a single community, promoting diversity and inclusion.

Social Framework

The structured set of social institutions, norms, and practices that guide and shape individual and collective behavior.

Canada

A country located in the northern part of North America, known for its multicultural population and diverse landscapes.