If Banks Have Zero Excess Reserves,then the Net Effect on the Money

question 31

Multiple Choice

If banks have zero excess reserves,then the net effect on the money supply of any cheque writing from one commercial bank to another is

• A)positive since the desired reserve ratio is always less than one.
• B)zero since the gain in excess reserves at one bank is offset by a reduction in excess reserves of the same amount at another bank.
• C)negative since the loss in excess reserves at one bank is always greater than the gain in excess reserves at another bank.
• D)positive as long as the person who makes a deposit does not take out cash.

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Definitions:

Structure

The arrangement and relations between parts or elements of something complex, often used to describe the molecular arrangement in chemistry.

Fluorobenzene

A halogenated benzene derivative with a chemical formula C6H5F, often utilized as an intermediate in organic synthesis.

Benzene

A cyclic hydrocarbon with the formula C6H6, recognized for its aromatic properties and widespread use as a starting point in the manufacture of numerous chemicals.

3-bromotoluene

3-bromotoluene is a brominated aromatic compound with a bromine atom attached to the third position of a toluene molecule.