In the Simple Deposit Expansion Model,if the Fed Purchases $100

question 154

Multiple Choice

In the simple deposit expansion model,if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves,deposits in the banking system can potentially increase by

• A)$10.
• B)$100.
• C)$100 times the reciprocal of the required reserve ratio.
• D)$100 times the required reserve ratio.

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Definitions:

Truth Table

A table used in logic to determine the truth or falsity of all possible combinations of logical expressions.

Atomic Sentences

Simple statements in logic that cannot be broken down into smaller components while maintaining original meaning.

Truth Table

A mathematical table used in logic to determine the truth value of logical expressions depending on the truth values of their components.

Hypothetical Syllogism (HS)

A form of logical argument where two conditional statements lead to a conclusion, following the pattern: If A, then B; If B, then C; Therefore, if A, then C.