If the Required Reserve Ratio Is 10 Percent and the Fed

question 110

Multiple Choice

If the required reserve ratio is 10 percent and the Fed buys a $5,000 security from a depository institution,what happens to the money supply,using the simple multiplier?

• A)Nothing.
• B)It increases by $5,000.
• C)It decreases by $5,000.
• D)It increases by $50,000.
• E)It decreases by $50,000.

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Definitions:

Epinephrine

A hormone and medication, also known as adrenaline, used to treat severe allergic reactions and cardiac arrest by increasing blood flow and relaxing airways.

Cortisol

A steroid hormone produced by the adrenal gland that regulates a wide range of processes throughout the body, including metabolism and the immune response.

Progressive Muscle Relaxation

A technique aimed at reducing stress and anxiety by tensing and then relaxing muscle groups in a specific sequence.

Deep Breathing Exercises

A relaxation technique focusing on slow, deep, and controlled inhalations and exhalations, used to reduce stress and improve respiratory function.