Suppose the Entire Banking System Has $10 Million in Excess

question 56

Multiple Choice

Suppose the entire banking system has $10 million in excess reserves and a required reserve ratio of 5 percent.The deposit-creation potential of the banking system is:

• A) $5 million
• B) $10 million
• C) $100 million
• D) $200 million

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Definitions:

Organic Nitrogen Compounds

Chemical compounds that contain carbon and nitrogen, playing various roles in the metabolism of living organisms.

Rain Shadow

An area that has very little precipitation, found on the downwind side of a mountain range. Deserts often occur in rain shadows.

Windward Side

The side of a mountain or island that faces the direction from which the wind is coming, often receiving more rainfall.

Temperate Regions

Areas of the Earth characterized by moderate temperatures, neither extremely hot nor cold.