If All the Commercial Banks in the Banking System Collectively

question 93

Multiple Choice

If all the commercial banks in the banking system collectively have $300 million in cash reserves and are satisfying their target reserve ratio of 20%,what is the amount of deposits they have?

• A)$0
• B)$60 million
• C)$600 million
• D)$1500 million
• E)$2000 million

Understand the functions and significance of derivative securities.

Recognize the major components of household assets and liabilities in the U.S.

Explain the concept of asset allocation and security selection.

Recognize the role of financial intermediaries in the economy.

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Definitions:

Disinflation Costs

Entails the economic costs associated with reducing the rate of inflation, which can include increased unemployment and slower economic growth.

Short-run Phillips Curve

The short-run Phillips Curve depicts an inverse relationship between the rate of inflation and the unemployment rate within an economy over a short period.

Expected Inflation

The rate at which people predict prices will rise in the future, influencing saving and spending behavior.

Phillips Curve

An economic concept that illustrates an inverse relationship between the rate of unemployment and the rate of inflation in an economy.