Answer the Question on the Basis of the Following Consolidated

question 127

Multiple Choice

Answer the question on the basis of the following consolidated balance sheet of the commercial banking system.Assume that the reserve requirement is 20 percent.All figures are in billions and each question should be answered independently of changes specified in all preceding ones. $\begin{array}{c}\begin{array}{lll}\quad\quad\quad\underline{\text { Assets}}\\\text { Reserves}\\\text { Securities}\\\text { Loans}\\\text { Property} \end{array}\begin{array}{l}\\\$ 200 \\300 \\500 \\400 \end{array}\begin{array}{lll}\quad\quad \underline{\text { Liabilities \& Net Worth }}\\\text { Checkable Deposits}\\\text { Stock Shares}\\\\\\\end{array}\begin{array}{lll}\\\$1,100\\400\\\\\\\end{array}\end{array}$


Refer to the given data.If the Fed reduced the reserve requirement from 20 percent to 16 percent,excess reserves in the commercial banking system would increase by _____ and the monetary multiplier would rise to ____.

• A) $10 billion;5
• B) $40 billion;6.25
• C) $10 billion;10
• D) $40 billion;12.5

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