Scenario 25-2 Imagine That Kristy Deposits $10,000 of Currency into Her Checking

question 80

Multiple Choice

Scenario 25-2

Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%.

-Refer to Scenario 25-2. As a result of Kristy's deposit, checking account deposits in the banking system as a whole (including the original deposit) could eventually increase up to a maximum of

• A) $8,000.
• B) $10,000.
• C) $50,000.
• D) $100,000.

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Definitions:

Variable Input

An input whose quantity the firm can vary at any time to increase or decrease production.

Total Product Curve

The total product curve illustrates the relationship between the quantity of inputs used in production and the quantity of output produced, demonstrating the law of diminishing returns.

Variable Input

A production input whose quantity can be changed in the short term to adjust the level of output.

Marginal Product Curve

The marginal product curve depicts the change in output resulting from employing one more unit of a specific input, holding all other inputs constant, and typically features phases of increasing, constant, and diminishing marginal returns.