The Banking System Currently Has $100 Billion of Reserves,none of Which

question 297

Multiple Choice

The banking system currently has $100 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 lowers the reserve requirement to 8 percent and at the same time buys $10 billion of bonds,then by how much does the money supply change?

• A) It rises by $225 billion.
• B) It rises by $375 billion.
• C) It rises by $675 billion.
• D) None of the above is correct.

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Definitions:

Basic Fault

In psychoanalytic theory, a deep-seated issue arising from early developmental stages that leads to psychological problems in adulthood.

Object Relations Theory

Object Relations Theory is a psychoanalytic theory that emphasizes relationships and the impact of the internalized images of these relationships on psychological processes.

Split-object Image

A term from psychology, particularly object relations theory, indicating how an individual perceives others as either entirely good or entirely bad, without an integrated view.

Object Integration

The process of combining different elements or pieces of information into a cohesive whole.