Suppose the Required Reserve Ratio Is 5 Percent and the Fed

question 23

Multiple Choice

Suppose the required reserve ratio is 5 percent and the Fed buys a $10,000 bond.If money is deposited into a commercial bank,what will initially happen to money supply?

• A) It will increase by $10,000.
• B) It will increase by $5,000.
• C) It will increase by 5 percent.
• D) It will increase by $200,000.

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Definitions:

Legal Possession

The condition of having legal control over an object, property, or title, recognized by law.

Previous Tenant

An individual or entity that occupied a property or space prior to the current occupant.

Rent Payments

The amount of money paid periodically by a tenant to a landlord in exchange for the use of land or property.

Breaching The Lease Agreement

Breaching the lease agreement refers to failing to comply with the terms laid out in a lease contract, which can lead to legal consequences and penalties.