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:

Centralization

The concentration of decision-making authority at higher levels within an organization.

Specialization

The process of focusing on a specific area of knowledge or skill, often to increase efficiency or expertise.

Organizational Structure

The system of tasks, workflows, reporting relationships, and communication channels that link together diverse parts of an organization.

Contextual Variables

External or environmental factors that influence the behavior of individuals or the performance of organizations.