In Macroland,there Is $10,000,000 in Currency

question 43

Multiple Choice

In Macroland,there is $10,000,000 in currency.The public holds half of the currency and banks hold the rest as reserves.If the banks' desired reserve-deposit ratio is 10%,deposits in Macroland equal ________ and the money supply equals ________.

• A) $50,000,000;$60,000,000
• B) $55,000,000;$55,000,000
• C) $50,000,000;$55,000,000
• D) $100,000,000;$100,000,000
• E) $100,000,000;$110,000,000

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Definitions:

Financial Intermediaries

Institutions that serve as middlemen between savers and borrowers, like banks, insurance companies, and investment firms, facilitating the flow of funds in the economy.

Net Borrower

An entity or individual that borrows more money than it lends, resulting in a net debt position.

Net Saver

An individual or entity that saves more money than they spend or invest, contributing positively to their financial assets over time.

Utility-Maximizing

Represents the economic principle where individuals or firms make choices that result in the highest possible level of satisfaction or efficiency within their constraints.