If Reserves Increase by $5 Million,what Is the Difference in the Resulting

question 49

Multiple Choice

If reserves increase by $5 million,what is the difference in the resulting change in checkable deposits when the required reserve ratio is 12.5 percent compared to when it is 10 percent?

• A)$12.5 million
• B)$10 million
• C)$2.5 million
• D)$100 million

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Definitions:

Price Elasticity

A measure of the sensitivity of quantity demanded or supplied to changes in price.

Teeth Whitening

A cosmetic dental procedure aimed at lightening the color of teeth to improve appearance by removing stains and discoloration.

Elastic

Describes demand that is sensitive to price changes, where a small change in price results in a significant change in the quantity demanded or supplied.

Dropping Price

A strategy involving the reduction of the price of a product or service with the aim of attracting more customers or selling off surplus stock.