Suppose the Required Reserve Ratio Is 0

question 13

Multiple Choice

Suppose the required reserve ratio is 0.2 and the Fed buys $100,000 in government securities from Big Bank.How much money can the commercial banking system create?

• A)$1,000,000
• B)$500,000
• C)$100,000
• D)$80,000
• E)none

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Definitions:

Inborn

Traits, characteristics, or abilities present in an individual from birth, not acquired or developed through experience.

Culture

The entire way of life of a group of people (including both material and symbolic elements) that acts as a lens through which one views the world and that is passed from one generation to the next.

Symbolic Culture

The aspect of culture that consists of the symbols, language, norms, and values that people create and share to communicate and make sense of the world.

Political Party

A structured group of people who share similar political aims and opinions, and aim to influence public policy by getting its candidates elected to public office.