Use the Following to Answer Questions

question 52

Multiple Choice

Use the following to answer questions :
-(Scenario: Assets and Liabilities of the Banking System) Look at the scenario Assets and Liabilities of the Banking System. Suppose that the reserve ratio is 10% and the Federal Reserve sells $25,000 worth of U.S. Treasury bills to the banking system. If the banking system does NOT want to hold any excess reserves, _____ will be _____ the money supply.

• A)$110,000; added to
• B)$110,000; subtracted from
• C)$250,000; subtracted from
• D)$250,000; added to

---

Definitions:

Economists

Researchers who explore the processes of making, moving, and consuming products and services in the economy.

Economic Activity

Activities related to the manufacturing, disseminating, and utilizing products and services in an economic system.

Fluctuations

Fluctuations refer to variations or changes in a condition, value, or level of economic variables over time.

Inflation

The escalation speed in general price levels of goods and services, ultimately leading to diminished power for making purchases.