-Refer to the Above Information

question 143

Multiple Choice

-Refer to the above information.If the desired reserve ratio falls from 25 percent to 10 percent,excess reserves of this single bank will:

• A) rise by $6,000 and the monetary multiplier will increase from 4 to 10.
• B) rise by $60,000 and the monetary multiplier will increase from 4 to 10.
• C) fall by $6,000 and the monetary multiplier will decline from 30 to 10.
• D) fall by $2,000 and the monetary multiplier will decline from 10 to 4.

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Definitions:

Investment

The purchase of goods that are not consumed today but used in the future to create wealth, including machinery, buildings, or equipment for production.

Income

is the money received by individuals or entities, typically in the form of wages, salaries, rent, interest, dividends, or profits, for providing labor, capital, or resources.

Aggregate Expenditure Line

The aggregate expenditure line is a graphical representation in macroeconomics that shows all planned expenditures of an economy at different levels of income or GDP, indicating total spending on goods and services in an economy.

Aggregate Demand Curve

A graph that represents the total demand for all goods and services in an economy at various price levels.