There Is $5,000,000 of Currency in Econland, All Held by Banks

question 84

Multiple Choice

There is $5,000,000 of currency in Econland, all held by banks as reserves. The public does not hold any currency. If the banks' desired reserve/deposit ratio is 0.25, then the money supply equals:

• A)$5,000,000
• B)$6,250,000
• C)$10,000,000
• D)$20,000,000

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Definitions:

Physical Stimulus

An external event or factor that influences a physical response or reaction in an organism.

Light

Electromagnetic radiation within a certain portion of the electromagnetic spectrum, visible to the human eye and responsible for the sense of sight.

Vision

The ability to see, resulting from the processes of light being detected by the eyes and interpreted by the brain.

Colour

The property of objects as perceived by the human eye and brain due to the way an object reflects or emits light.