Answer the Question on the Basis of the Following Table

question 79

Multiple Choice

Answer the question on the basis of the following table for a commercial bank or thrift: $\begin{array}{c}\begin{array}{c}(1) \\\text {Legal Reserve}\\\underline{\text {Ratio (\%) }}\\10 \\20 \\25 \\30\end{array}\begin{array}{c}(2) \\\text {Checkable}\\\underline{\text {Deposits}}\\ \$ 40,000 \\40,000\\40,000\\40,000\end{array}\begin{array}{c}(3) \\\text {Actual}\\\underline{\text {Reserves}}\\\$ 10,000 \\10,000\\10,000\\10,000\end{array}\end{array}$

Refer to the table.If the legal reserve ratio falls from 25 percent to 10 percent,excess reserves of this single bank will:

• A) rise by $6,000 and the monetary multiplier will increase from 4 to 10.
• B) rise by $60,000 and the monetary multiplier will increase from 4 to 10.
• C) fall by $6,000 and the monetary multiplier will decline from 30 to 10.
• D) fall by $2,000 and the monetary multiplier will decline from 10 to 4.

Distinguish between one-tailed and two-tailed tests in hypothesis testing.

Recognize the significance level (\(\alpha\)) and its role in hypothesis testing.

Apply probability principles to evaluate outcomes of random trials.

Analyze real-world data to make statistical inferences.

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Definitions:

Interest Rates

The percentage at which interest is paid by borrowers for the use of money they borrow from a lender.

Credit Card Debt

Money owed due to spending through credit cards, characterized by high interest rates if not paid off promptly.

Loanable Funds

The resources available for borrowing, which consist of household savings and income that banks and other financial institutions can lend to borrowers.

Retirement Savings

Funds set aside during an individual's working years, intended to support them financially during retirement.