If Reserves Increase by $7 Million and the Required Reserve

question 36

Multiple Choice

If reserves increase by $7 million and the required reserve ratio is 12%,what is the resulting change in checkable deposits (or the money supply) ,assuming that there are no cash leakages and that banks hold zero excess reserves?

• A)$0.84 million
• B)$7.95 million
• C)$5.83 million
• D)$58.33 million

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Definitions:

Dependency Theorists

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Brutality

Savage physical violence; great cruelty or a brutal act that demonstrates a lack of humanity or consideration.

Economic Enrichment

An increase in wealth or resources in an economy, leading to better quality of life and economic development.

Modernization Theory

A theory in sociology that argues that societies progress linearly from traditional to modern states, emphasizing the role of technology, economic development, and rational social institutions.