If All Banks Are Subject to a Uniform 20% Reserve

question 340

Multiple Choice

If all banks are subject to a uniform 20% reserve requirement and demand deposits are the only form of money,a $1,000 open market sale by the Fed would cause the money supply to

• A)increase by $1,000.
• B)decrease by $1,000.
• C)decrease by $5,000.
• D)increase by $5,000.

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A logical process where a conclusion is based on the concordance of multiple premises that are generally assumed to be true.

Inductive Thinking

A cognitive process that encompasses deriving broad inferences from particular examples or situations.

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The inability to differentiate between one's own perspective and someone else's perspective.