If the Reserve Ratio Is 10 Percent and a Bank

question 43

Multiple Choice

If the reserve ratio is 10 percent and a bank receives a new deposit of $20, what happens to the bank's reserves in the longer term?

• A) increase by $2
• B) increase by $18
• C) increase by $20
• D) increase by $200

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Definitions:

Covariance

A measure of how two stocks move together, indicating the degree to which their returns are related.

Swiss Stock Exchange

A major stock exchange located in Zurich, known for its strict privacy laws and strong financial services sector.

U.K. Bills

Short-term debt securities issued by the United Kingdom government, used to fund its operations and manage its money supply.

Exchange Rate

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.