There Is $5,000,000 of Currency in Econland,all Held by Banks

question 110

Multiple Choice

There is $5,000,000 of currency in Econland,all held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 25%,then the money supply equals

• A) $5,000,000.
• B) $6,250,000.
• C) $10,000,000.
• D) $20,000,000.
• E) $25,000,000.

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Definitions:

Mental Accounting

A behavioral economics concept describing how people categorize and utilize money differently based on subjective criteria, often leading to irrational financial decisions.

Dividend Income

Income received from holding shares in a company, distributed out of the company’s profits.

Hospital Bills

Expenses incurred for medical treatment and hospital stays, often payable by the patient or their insurance provider.

Congestion Area

A term used in technical analysis to describe a range-bound price movement in a security or market, characterized by repeated support and resistance levels.