Answer the Question on the Basis of the Following Consolidated

question 95

Multiple Choice

Answer the question on the basis of the following consolidated balance sheet for the commercial banking system.Assume the required reserve ratio is 10 percent.All figures are in billions. $\begin{array}{c}\begin{array}{lll}\quad\quad\quad\underline{\text { Assets}}\\\text { Reserves}\\\text { Securities}\\\text { Loans}\\\text { Property} \end{array}\begin{array}{l}\\\$30\\130 \\70\\200\end{array}\begin{array}{lll}\quad\quad \underline{\text { Liabilities \& Net Worth }}\\\text { Checkable Deposits}\\\text { Stock Shares}\\\\\\\end{array}\begin{array}{lll}\\\$300\\130\\\\\\\end{array}\end{array}$ Refer to the data.After the deposit of $10 billion of new currency,the maximum amount by which this commercial banking system can expand the supply of money by lending is:

• A) $9 billion.
• B) $45 billion.
• C) $36 billion.
• D) $90 billion.

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Definitions:

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, illustrating how fixed costs spread over units decrease with increased production.

Antitrust Action

Legal measures taken by governments to prevent or reduce monopolies and promote competition among businesses.

Economies of Scale

Cost advantages that businesses obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Competitive Industry

An industry characterized by many firms competing against each other, with low barriers to entry and products that are similar but not identical.